Recycling Lives Limited was a highly successful recycling company based in the North West of England. They turned over more than £100 million and offered many different recycling solutions, primarily servicing the private sector. In addition to offering environmentally safe recycling solutions, they then sold the recycled raw materials.
On 12th January 2024, Recycling Lives Limited filed a notice of intent to appoint an administrator with the courts. Unfortunately, this leaves its creditors in the difficult position of having to absorb the bad debts it will leave behind.
Red Flag Alert flagged this company as a risk as early as April 2023, giving our customers plenty of warning that it was at risk of failure.
Who were Recycling Lives Limited?
Recycling Lives Limited were a leading recycling and environmentally friendly waste disposal company. They offered multiple solutions including: vehicle processing, metal processing, total waste management and producer responsibility compliance (waste electrical & electronic equipment, packaging, and battery recycling). Recycled materials could then be sold, primarily to the construction and manufacturing industry. They produced over 500,00 tonnes and processed over 150,000 vehicles each year.
Recycling Lives had a strong focus on social responsibility; they regularly hired former service personnel, disadvantaged people, and ex-offenders.
What pressures did they face?
All UK companies have been trading under extremely difficult conditions since 2020, which have only got worse in the last two years. Significant macroeconomic pressures such as inflation, interest rates rises, cost of labour, and significant rises in costs of materials and energy. As a manufacturing company, Recycling Lives was especially vulnerable to the steep price rises of fuel and business energy.
As large proportion of their clients were in the construction and manufacturing industries; both for their recycling services and the purchase of the eventual recycled materials. Both of these industries are experiencing high levels of distress and insolvency, especially construction, which suggests that there may have been a slowdown in demand for their goods and services.
What went wrong?
Red Flag Alert first flagged Recycling Lives Limited as in distress and at risk of failure as early as April 2023.
The general trend of their turnover has been one of strong growth since 2017 but in 2021 it dropped by £40 million to £63.6 million before recovering again to £105.8 million in 2022. However, this growth in turnover was not matched by a growth in post-tax profits and the company had been running at a loss since 2018. They failed to file their accounts as expected in February 2023, which is usually a sign of disappointing results.
In August they suffered a winding-up petition being submitted against them. Whilst this was eventually withdrawn it speaks of serious financial difficulties and the lack of ability to meet their debts.
There was further signs of an imminent collapse when their Luxembourg-based parent company, TH FRAG II S.A R.L., secured three cross-company fixed charge debentures against the company. This suggests that they were aware of the impending insolvency and mitigated their loss by placing themselves as secured creditors with a fixed charge, who are the first to receive remuneration in an insolvency proceeding.
Red Flag Alert users enjoyed nine months of warning that this company was a danger to trade with and was a potential credit risk.
Our industry expertise and deep understanding of business failure is what sets Red Flag Alert apart from the rest of the credit risk and business data industry. Our algorithm is powered by over two decades of insolvency data and boasts a best in class 98% accuracy rating.
In this instance our customers were also empowered by our innovative group structure offering, which allows you to quickly and easily view, visualise and decipher complex group structures, as well as our database of over 350 million international reports. This made it effortless to see that there was an in group cross-company debenture that implied the parent company had lost faith in its solvency.
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