Courts and government authorities are cracking down on recycling giant SKM.

SKM Recycling, which has recycling contracts with over 30 Victorian councils, has been given until the end of next week to pay back millions of dollars in debts.

Court proceedings this week heard there would be “significant” environmental ramifications if the company closes.

Over 20,000 tonnes of glass, paper and plastic was dumped in landfill during the time that SKM was banned from accepting kerbside rubbish due to health and safety concerns.

Councils say that figure could reach into the hundreds of thousands of tonnes if the company is declared insolvent

SKM says tougher waste policies in China has left it with untenable stockpiles of waste at its recycling processing plants. The piles caught fire several times, leading to a crackdown by the EPA for licence breaches.

Six companies took SKM to court this week looking to reclaim $4.3 million in allegedly unpaid debts, or to have the company declared insolvent.

Meanwhile, an SKM glass recycling centre has been ordered by Victoria’s Environmental Protection Authority (EPA) to stop accepting combustible waste due to its existing stockpiles being non-compliant.

The Glass Recovery Services operation in Coolaroo was the site of two fires earlier this year.

Municipal Association of Victoria (MAV) president Coral Ross says that while the state government has dedicated $13 million to help councils cover the increased costs last year, it needs to go further.

She said the Government should keep other recycling plants operating longer hours and to scrap the state’s landfill levy if recyclable waste has to be dumped.

The MAV and the Greens are also calling for a container deposit scheme, as Victoria is the only state that does not have one in place or on the way.

Victoria’s environment minister Lily D’Ambrosio has ruled out bailing out SKM, but says the government is working with councils to find alternatives for managing kerbside recycling.

Melbourne deputy mayor Arron Wood told the ABC earlier this week that there is an investor watching the situation who may help rectify it, possibly by bailing out SKM, but he would not name them.

SKM’s founder, Giuseppe Italiano, reportedly told News Corp he wanted to close the company and destroy its machinery.