REDcycle liquidated after “damaging the reputation of packaging sector”

01 Mar 2023 --- A court has ordered REDcycle’s parent company to be wound up while Coles and Woolworths are officially taking over the company’s stockpiled soft plastics after its failed recycling scheme. 

REDcycle was declared insolvent after failing to pay storage fees for the 12,000 metric tons of soft plastics it secretly stockpiled in New South Wales (NSW), Victoria and South Australia. Coles and Woolworths had been allotted interim control of REDcycle’s recycling scheme while it sorted out the stockpiled plastics. 

The grocery stores recently offered to take over the piles officially and REDcycle accepted. The rescue plan does not include paying for REDcycle’s past debts or acquiring the company itself but only for the future management of the stockpiles.

Woolworths and Coles tell PackagingInsights that they are “pleased this agreement will provide greater certainty that REDcycle’s stockpiles will be responsibly managed for the best possible environmental outcome.”

Additionally, Jeff Angel, the director of the Boomerang Alliance, tells us that “REDcycle was a very small voluntary scheme not backed by the packaging producers using the collected material as recycled content. It was always vulnerable to market failure. Now we can get on with putting a genuine scheme in place focusing on the bulk of the soft plastics being collected and recycled.” 

REDcycle’s parent company ordered to be liquidated after failing to pay fines for its stockpiled plastics.Soft plastic liquidation
NSW transport firm BTG Logistics launched the application to wind up REDcycle over an unpaid AUD$200,000 (US$136,688) debt for storing about 600 metric tons of plastics on behalf of REDcycle. Leonie Walton, NSW’s supreme court registrar, ordered the scheme’s parent company RG Programs and Services be wound up on February 27.

“[It’s] their choice to be here – up to them to take it up with the liquidator,” says Walton. The Melbourne-based Topline Logistics joined the action in the Supreme Court.

PackagingInsights has contacted REDcycle for a comment, but the company has yet to respond. 

REDcycle’s founder and CEO, Liz Kasell, previously explained to us that the company was holding the plastics as a temporary solution and would soon find a replacement. 

“Holding soft plastics in stock is not a perfect solution, but REDcycle decided to hold material in the short term, at great personal expense to the organization, because they are fundamentally and profoundly committed to keeping the material out of landfills,” she said.

However, Angel asserts “There was a serious problem with the lack of transparency that fed the media headlines anColes and Woolworths take control of REDcycle’s soft plastic stockpiles to divert them from landfills. d suspicions they were hiding the problem. Also, the stockpiles were not managed for fire risk. I think it severely damaged the reputation of the packaging sector,” adds Angel. 

Next steps 
Coles and Woolworths intend to work with the relevant state EPAs to ensure their proposed storage arrangements meet the necessary safety requirements until the material can be processed. 

A Department of Climate Change, Energy, the Environment and Water (DCCEW) spokesperson tells PackagingInsights: “Coles and Woolworths are taking responsibility for more than 12,000 metric tons of stockpiled soft plastics and we want to see as much of that material diverted from landfill as possible.”

A potentially discussed solution could involve packing the plastics inside up to 1,000 shipping containers at a licensed facility. A Soft Plastics Recycling Contribution Fund will pay for storing and managing the stockpiled material. Coles and Woolworths state they will each provide an initial multi-million-dollar contribution. 

The supermarkets predict local recycling capacity to increase over the next 18 months as facilities re-open or are newly established. “There is still more to be done by industry and government to grow domestic soft plastic recycling capabilities,” asserts Coles and Woolworths.

“The Department is working closely with industry, including the supermarkets, to see the soft plastic collection and recycling systems restored as soon as possible,” adds the DCCEW spokesperson.

“We will be commencing work this week to address the current stockpile storage issues and conducting inspections of the REDcycle material over the coming weeks,” say the grocery stores. 

Environmentalists criticize supermarket giants for their claim of unawareness of material stockpiles.By choice or by force? 
Coles and Woolworths say they were unaware of the stockpiling REDcycle was committing with its return scheme and therefore are looking for solutions now to remedy the issue. 

The supermarkets state they will implement an interim strategy, such as safely storing the soft plastics until they can be viably processed for recycling instead of being sent to landfills. 

Recently, Coles and Woolworths were served by the NSW Environment Protection Authority (EPA) with a draft Clean-up Notice due to the stockpiling scandal. At the time, it was feared to “clean up,” the companies would have to send the material to landfills. 

However, Angel does not believe the grocery stores’ blindness about the hoard of soft plastics and believes their motivation is more about saving face. 

“Despite claiming ignorance about REDcycle’s failing operations, the big supermarkets were getting significant reputational benefits from the scheme with the REDcycle logo on all their recyclable packaging and frequent media statements about how environmentally responsible they were. They had no excuse but to take control of the soft plastic stockpile, especially after the NSW EPA also issued control orders,” concludes Angel.

By Sabine Waldeck