Circularity Scotland Limited - Case Update

The Joint Administrators of Circularity Scotland Limited, which was due to manage Scotland’s controversial bottle recycling deposit-return scheme (DRS), have filed their proposals outlining the reasons for the demise of the company, as well as their plans going forward.

The company was incorporated in November 2020 to administer Scotland’s DRS, which had been scheduled to commence in August 2023. In April 2023, the Scottish Government announced a delay to the implementation of the DRS until March 2024. Subsequent to the announcement, the UK Government only granted approval to the DRS if glass was removed from the scheme. On 7 June 2023, the Scottish Government announced a further delay of the implementation of the DRS – until October 2025 at the earliest – to align the Scottish scheme with UK-wide timing and scope.

At this point, it became clear that the business could not continue to operate without further funding. After the directors were unable to obtain the funding required, they lodged an NOI and Blair Nimmo and Alistair McAlinden of Interpath Advisory were appointed Joint Administrators on June 20.

On appointment, the Joint Administrators considered whether it was possible to implement a strategy that would avoid an immediate shutdown of the company. The Joint Administrators considered the various assets the directors believed were of value, including employee ‘know how’, the IT systems and processes, research into appropriate retailer recompense, the producers’ agreements, the company’s status as DRS administrator, and the contract with the logistics provider.

Despite the publicity the situation attracted, no party approached the Joint Administrators following their appointment and it became apparent that value likely could not be achieved for the intangible assets. The Joint Administrators determined that the only option was to minimise ongoing costs via a closure strategy. All employees have been made redundant.

It is expected that Scottish National Investment Bank will be repaid some, but not all, of the £9 million owing to it. Employees are expected to receive their arrears of wages, unlimited accrued holiday pay and certain pension benefits. Unsecured creditors are expected to receive a nominal dividend.

The Joint Administrators have been assisted by Addleshaw Goddard. Their proposals can be found HERE.