Waste management giant Cleanaway may buy out the collapsing recycler SKM.

The shutdown and financial collapse of SKM has sent Australia's recycling industry plunging into crisis, sending thousands of tonnes of recycling straight to landfill every week.

The company was shut down by Victoria’s EPA after a string of fires and environmental issues at its Melbourne facilities.

SKM is now in receivership with $100 million worth of debts, and ASX-listed Cleanaway announced on Wednesday that it had acquired $60 million of that debt.

“The acquisition of the debt will allow us to work with the receivers to examine viable options for SKM,” Cleanaway chief executive Vik Bansal said in a statement.

“If a sale process is undertaken and if we are successful in purchasing any assets, we will return the assets to a sustainable footing.”

KordaMentha receivers are currently managing the business.

“We will be aiming to get the business back to capacity to help ease Victoria's waste crisis,” Mark Korda said in a statement on Wednesday.

“This must be done within our statutory obligations to get the best value from the business while repaying the secured creditor.”

Mr Korda said with an interim financial support and industry expertise of Cleanaway as creditor, receivers can start making real decisions on what can be done.

The operations are expected to be placed on maintenance for an assessment period which will include finding out just how much recyclable material is stored at warehouses across Melbourne.