Creditors to the New Earth Solutions Group are likely to miss out on over £9 million after the waste management company was sold out of administration.
A report issued by the company’s administrator Duff & Phelps to its 260 creditors explains that £9,169,521 is owed, with no hope of repayment.
Almost £4 million of the figure is made up of intercompany loans, with a further £1 million owed to HM Revenue and Customs. The rest of the £4.21 million is owed to a range of creditors. Those set to miss out most are two European waste management companies: shipping and logistics company Bertling Enviro AB, part of the Hamburg-based Bertling Group, is owed £828,000, while AVR Afvalverwerking-B.V., a Dutch company that converts waste into energy, is set to miss out on £800,000.
Investors were told in June that they were ‘unlikely’ to recover any funds from the sale of the company to Leeds-based DM Opco, two days after it had entered administration.
On 8 June, the High Court of Justice on the Isle of Man filed a claim seeking a winding-up order for the New Earth Recycling & Renewables Fund (NERR), as well as investment funds the Eclipse Investment Fund and the Premier Investment Opportunities Fund (PIOF). Money from investors was invested into NERR by the governing bodies of PIOF and Eclipse, and subsequently invested into the two trading New Earth companies – New Earth Solutions Group Ltd and New Earth Solutions Facilities Management Ltd.
Sale of company
According to the report, in October 2014, the group carried approximately £159 million of debt, with £37 million due to the Co-operative Bank and £102 million to the New Earth Recycling & Renewables Fund. A further £20 million was also owed to Macquarie Bank from the energy side of the business.
Duff & Phelps was appointed as administrator of New Earth Solutions Group and its sister company New Earth Solutions Facilities Management in early June following a breakdown in protracted talks with an unnamed plant developer to purchase the company.
Little is known about DM Opco, the sole director and shareholder of which, Declan McKelvey, is listed by Companies House as an accountant that was appointed as director of Direct Golf UK last October after its administration was also handled by Duff & Phelps. However the sale was said to safeguard the 143 jobs across New Earth Solutions’ five sites, which treat around 450,000 tonnes of municipal and commercial waste a year through in-vessel composting and mechanical biological treatment, as well as at its head office in Verwood, Dorset.
The Duff & Phelps report states that the company bought New Earth’s business for £5.9 million, with the majority (£3.2 million) going towards equipment and vehicles.
Prior to the company entering administration, the report notes that 51 companies had expressed an interest in new Earth Solutions, with seven following up with written expressions of interest, three of which wanted to take the business and assets forward as a going concern. However, none of the offers were considered acceptable by the senior lender, the Co-operative Bank, and were rejected in March.
The full report to New Earth Solutions Group’s creditors can be seen here.