Premier Waste Management, majority owned by Durham Council (pictured) with the Darlington authority holding a smaller share, has gone into liquidation, with debts of £19m.
The company stopped trading at the end of May and joint liquidators from KPMG were brought in earlier this month.
Of its 150 creditors, the company owes £12m to the staff pension fund, which is now likely to be passed to the Pension Protection Fund, which would issue compensation to members.
According to The Northern Echo, small business owners in the area have accused the councils of allowing the company to continue trading when they knew it was insolvent.
The company entered a Company Voluntary Agreement (CVA) in February after Durham County Council handed the contract for domestic waste collection in the county to a rival company.
David Atkinson, Plasrec – “They’re supposed to be helping small businesses in Durham but they seem to have taken relish in shafting us. “If I had done what they had done I’d be in jail”
Plasrec Ltd, which operated two public recycling centres for the company said the Premier Waste Management signed the last one-year rolling contract knowing it would not be able to pay.
“If I had done what they had done I’d be in jail,” Plasrec managing director, David Atkinson said. “They’re supposed to be helping small businesses in Durham but they seem to have taken relish in shafting us.”
Don McLure, Durham County Council corporate director of resources, denies any rules have been broken.
He said: “Premier Waste Ltd has been trading through a regulated Company Voluntary Arrangement since February 2013 under which all creditors have been paid in full between then and 31 May 2013 when the company ceased trading.
“The company is now in the process of voluntary liquidation and the outstanding creditors will have made a claim through KPMG who is the liquidator.
“There has been no wrongful trading and county council officers on the board of the company are subject to the same legal duties and responsibilities as all other directors.”