Handling a high-risk environmental site

Background

FRP was appointed as administrators of a group of companies, and receivers of the freehold, of an industrial biogas plant and a 320-acre dairy farm in West Sussex.

The plant had been constructed without appropriate planning and environmental permissions. The site was subject to a planning appeal against a judgment to end certain production and exportation of biomethane.

Action

The secured lender, who had an indebtedness of £52 million, provided further funding to enable our team to trade the facility in administration. The site had experienced four separate environmental incidents in the 24 months prior to appointment, leading to severe contamination of the local watercourses and agricultural land. As a result of the lack of planning and the contamination events, the site was a major concern for the Environment Agency, and was high profile in the media.

The administrators engaged immediately with the Agency and took steps to protect the site including improvements to health and safety, protection of the site against environmental risks, and improved reporting and communications. Of particular concern was a 178-metre long lagoon, containing 55,000m3 of digestate (the sludge by-product of the biogas process, usually used as fertiliser); the lagoon was built without planning permission and with serious structural integrity issues.

The administrators secured the lagoon during the first weeks of administration, as the risk of a malicious environmental incident was considered high. Activities undertaken during administration process included gas exportation via HGV, and the construction of new carriageways. The site and all activities were continuously monitored by various environmental action groups; the administrators communicated with these groups to protect the secured creditors from criticism.

Outcome

The site was traded for three months while being marketed for sale. However, when a previously submitted planning appeal was subsequently refused, the administrators undertook a decommissioning of the site, working closely with the Environment Agency to ensure that it was made safe while further planning applications were prepared and submitted.

The receivers were able to sell all land other than the digestate lagoon, which was returned to the landowner, and the administrators exited into compulsory liquidation.