UPDATE, Friday, 5pm: Maddens Lawyers expects a class action payout will proceed following a fire at SKM's Coolaroo recycling site, despite the Supreme Court ordering the company to wind up.
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The Supreme Court granted the approved settlement on Thursday, but in a separate case SKM was ordered by the Supreme Court on Friday to wind up.
Principal lawyer Kathryn Emeny said Friday's application related to a different legal entity, SKM Corporate, than the defendant in the class action, SKM Services.
"Further, we understand the July 2017 fire was an insured event," Ms Emeny said.
"We expect payment of the $1.2m settlement sum to occur shortly.
"Maddens Lawyers will then manage the distribution of compensation to those participating in the class action."
She said each of the participants would receive 65 to 70 per cent of their total assessed losses.
UPDATE, Friday, 1pm: One of Victoria's biggest kerbside recycling companies has been ordered to wind up after failing to pay creditors millions of dollars, putting a Warrnambool law firm in a tough position.
The Supreme Court on Friday agreed to an application by multiple creditors that SKM Recycling cease trading after the company failed to produce a promised $13.5 million from a new investor.
The state government has previously labelled SKM a rogue operator following a series of fires and stockpiling issues at its Melbourne plants.
On Thursday 210 class action participants were awarded $1.2 million after a fire at an SKM recycling plant in July 2017 - on average about $5700 each.
That action was led by Maddens Lawyers, of Warrnambool.
Supreme Court documents show that there was a hearing scheduled for August 8 when the court was expected to approve Maddens' costs, which would be taken out of the $1.2 million settlement amount.
Those costs are expected to run into hundreds of thousands of dollars.
Maddens Lawyers principal Kathryn Emeny has been contacted for comment to clarify her company and class action participants' position.
Thursday: SKM Services has been ordered to pay $1.2 million to people affected by a fire at one of its Melbourne recycling plants, following a class action headed by a Warrnambool law firm.
The class action was on behalf of residents and businesses impacted by smoke, ash and toxic fumes near the Coolaroo recycling plant fire in July 2017.
The Supreme Court approved the settlement on Thursday and Maddens Lawyers principal Kathryn Emeny said each of the 210 participants would recoup up to 70 per cent of their assessed losses in coming months.
"Even if each individual claim was quite modest, collectively they've been able to achieve a good outcome," Warrnambool-based Ms Emeny said.
Evacuations and clean-up works forced several businesses to suspend trading following the fire. Ms Emeny said locals had reported growing concerns associated with the stockpiling of hazardous waste materials before the fire.
Lead plaintiff Castor Murillo said in a statement that he and his family were forced to evacuate their home for six days after the event and had suffered nausea and breathing difficulties.
"It is a great outcome for everyone that was affected by the fire two years ago," Mr Murillo said. "Many of us are still suffering the impacts of the fire, and this settlement will help to alleviate some of the pressures."
Ms Emeny said the case highlighted the risk of operating a large plant next to residential properties and businesses.
SKM is also at the centre of a recycling crisis after telling more than 30 contracted councils last week that it would no longer receive recycling.
The state government has found alternatives for about 40 per cent of those councils, but others including Moyne Shire are now sending recycling to landfill.
"The industry is facing some challenges generally moving forwards," Ms Emeny said.
"Some of the reasons some of the group members participated in the class action was to see some positive change around the waste industry and the management of hazardous materials moving forward."
SKM Services and their lawyers were approached for comment.
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