A Palmerston North rubbish and recycling business is set to be sold after two related companies were put in the control of receivers, owing more than $4 million.

Cairns Transport and Manawatu Transfer Station have been placed in receivership. Both are part of the Cairns Group.

Owned by Ash Cairns and founded in 1980, the group specialises in recycling large materials but also manages rubbish collections.

John Fisk from receivers PricewaterhouseCoopers said Mr Cairns had asked the bank to put the companies into receivership after an attempt to sell the company fell over.

"They had been trying to sell the business, but the party they were dealing with pulled out at the end of June, and as a result of that requested the bank to appoint receivers."

When the accounts from the two companies were put together, the bank was owed about $4m, while trade debt was about $500,000.

While there were 37 fulltime staff and 10 casuals employed, seven jobs had already been cut, he said.

"We had to reduce staff to fit the amount of work there was at the time.

"Unfortunately the volumes going through the material recovery facility [meant] we just couldn't justify the level of staff."

There was no plan to try to trade the business out of trouble, he said.

"We will be looking at selling the business as a going concern, or break it up," Mr Fisk said.

"We think there might be interest in certain aspects of the business, but not the whole business."

Mr Fisk said Cairns Transport had a strong history. It originally started trading as Bowaters Transport about 66 years ago.

"It's been a longstanding Manawatu business. You don't last that long without being successful."

The recycling market was a competitive one, and a slowdown in the construction industry would not have helped business, he said.

Cairns Group started as a service taking rubbish from dairies to dumps, and quickly expanded.

But in 2008 it lost a Palmerston North City Council contract to provide skip bins around the city, dumped and replaced by Auckland-based Waste Management Bins.

In 2010, the company invested in a $3m large-materials recycling centre at its Matthews Ave site, near the Palmerston North railway station.

At the time, Mr Cairns said the centre would help to future-proof the business.

About a year ago, Cairns lost vehicles from its fleet after a fire at an engineering warehouse near Matthews Ave.

- © Fairfax NZ News