Greys Recycling Industries files for bankruptcy
A paper-recycling company that received millions from the City of Edmonton has filed for bankruptcy, partly because of poor sales caused by an unsatisfactory product, according to court documents.
From 2009 to 2014, the city invested a total of $9.4 million in land, buildings and equipment leased to Greys Recycling Industries, located at the Edmonton Waste Management Centre.
The arrangement called for the company to pay the city back through lease payments.
In documents filed in Edmonton Court of Queen's Bench, the trustee listed three factors that contributed to the insolvency: lack of cash due to poor sales, pressures from the city of Edmonton to pay overdue rent and poor quality of the product.
"The quality of Greys' current paper products is not considered satisfactory to potential customers on a broad scale, resulting in poor revenues and need for new equipment and additional capital," according to the documents.
The company was seeking an additional $1.5 million in financing to keep afloat but was unable to find investors. The documents list dozens of creditors who are owed amounts ranging from $21.20 to millions of dollars. The total owned to creditors is $9,775,731.
According to the bankruptcy documents, Greys owes the city more than $1 million: $780,806.92 for rent at the landfill site, $150,373.47 in taxes and $79,826.44 for hauling waste water.
Mayor Don Iveson said he's disappointed the company couldn't make the technology work but isn't concerned the city is in too deep.
He said the city owns assets that include a building that can be re-purposed if necessary.
"The risk was low for us and it didn't put us in an ownership or investor position," he said. "We didn't want to take on that risk."
As for Greys' suggestion the equipment wasn't up to par, Iveson said he couldn't speak to a technical issue like that. He said he thinks the equipment is "best in class."
"All I can say is that the city would be a willing host and partner to work with a company to mature the technology, and build a business that could be a great Edmonton success story."