Australia's largest waste management company Cleanaway is primed to take over recycler SKM and says it can return it to a "sustainable footing".
The collapse of SKM - the City of Ballarat's recycling contractor - has plunged Australia's recycling industry further into crisis, with tonnes of recycling now being sent straight to landfill or piling up in warehouses in some states.
On Wednesday the ASX-listed Cleanaway announced it had acquired $60 million of SKM's debt. It has also appointed receivers KordaMentha to manage the business.
"The acquisition of the debt will allow us to work with the receivers to examine viable options for SKM," Cleanaway chief executive Vik Bansal said in a statement.
"If a sale process is undertaken and if we are successful in purchasing any assets, we will return the assets to a sustainable footing."
READ MORE: STILL HOPE FOR AN SKM RECYCLING RESCUE
SKM Group, which employs about 170 permanent staff and processes recycling from councils in Victoria, South Australia and Tasmania has debts of about $100 million, including to its employees and other businesses.
KordaMentha is keen to get the business going again.
"We will be aiming to get the business back to capacity to help ease Victoria's waste crisis," Mark Korda said in a statement on Wednesday.
"This must be done within our statutory obligations to get the best value from the business while repaying the secured creditor."
READ MORE: RECYCLING CRISIS A 'SLOW-MOTION TRAIN WRECK'
China's decision to stop accepting overseas waste was the first domino in a series that ended up with SKM collapsing and Australia's recycling piling up with no one to process it.
SKM was ordered to stop taking recycling after a number of fires at its Melbourne facilities, but the company was also unable to send the material overseas.
Warehouses full of unprocessed rubbish are now filling up in Victoria, while other recycling is being sent straight to landfill.
The receivership appointment excludes the SKM's glass recovery business Glass Recovery Services, which has glass processing facilities in Penrith and Melbourne, but has also been banned from taking waste at its Melbourne site.
Mr Korda said with the interim financial support and industry knowledge of Cleanaway as the secured creditor, the receivers will immediately start sorting through what can be done.
That includes putting the operations on maintenance during an immediate assessment of the business, including the backlog of recyclable materials stored at each site.
They will also look at how to restructure the business and look at a potential sale.