Tens of thousands of people around the country are owed millions of dollars in unpaid appliance rebates after the failure of a major appliance-recycling company, court documents show.

Bothell, Wash.-based JACO Environmental, which will have its assets sold off, also owes creditor Key Bank more than $15 million, according to court filings.

At the request of Key Bank National Association, a King County (Wash.) Superior Court judge on Nov. 18 appointed a receiver, MorrisAnderson, to take over management of the company and handle liquidation of the its assets. At the time, the company was so cash-poor it was at risk of failing to pay its taxes and utilities, according to MorrisAnderson.

The company described itself as one of the largest appliance recyclers in the U.S., serving 28 states. It picked up anywhere from 5,000 to 20,000 appliances per day for recycling, Mark Welch, principal of MorrisAnderson, told Resource Recycling.

The company ceased operating as of Nov. 23, a victim of depressed steel prices. JACO was on the verge of negotiating a sale to another company, but the deal fell through, resulting in the receivership, Welch said.

“JACO was losing in excess of a $1 million of cash per month, and without supplemental funding, they could not survive,” Welch said. “That was the position they were in.”

JACO’s failure put on hold appliance-recycling programs at utilities around the country, though competitors are considering purchasing JACO’s assets, including customer lists, a call center and multiple recycling locations.

Welch said he’s still working to determine how much material the closed company has on hand.

Unpaid rebates

JACO owes about $4 million in appliance-replacement rebate payments to people around the country, Welch wrote in court papers. Upwards of 100,000 people could be affected, he said.

The company managed rebate programs for utility providers and other companies. Typical rebates of $30 to $50 were paid to individuals who recycled their old, less-energy-efficient appliances and replaced them with new ones.

Through the program, the companies paid money to JACO to help pay collection and recycling costs and rebates for customers. For its services, JACO collected service fees from the utilities and was entitled to recover value from the scrap material.

JACO deposited all cash into one operating account and did not earmark funds for rebates, Welch said. Of the $4 million owed in rebates, about $2.5 million is owed to customers who gave up their old appliances but never got a rebate check, and the remaining $1.5 million is owed to customers who gave up their old appliances and either got a check they haven’t cashed or got a check that bounced, Welch wrote.

Welch said his first priority is ensuring customers get their rebates. “That’s a priority to me, to make sure the little guys aren’t getting hurt,” he said.

JACO officials could not be reached for comment.

Meanwhile, others are looking to buy JACO assets.

An investment firm and a recycling company are working together to draft an offer to buy JACO’s intellectual property, including its customer lists, Welch said.

In addition, Appliance Recycling Centers of America, Inc. (ARCA) is exploring buying some of JACO’s 22 locations around the country to expand its capacity, he said.

In a press release, publicly traded ARCA noted it will actively pursue obtaining JACO contracts.