The council insisted it had undertaken due diligence and found "EcoVersion had the capacity to complete the contract".
However, the Kawerau District Council found fishhooks in the deal when a tyre mountain sprang up overnight as EcoVersion began building a new stockpile of used rubber - from Frankton and elsewhere - on council land.
Councillor Rex Savage said he became concerned when told of mysterious night-time deliveries adding to the mountain, now estimated to contain around 200,000 tyres.
Mr Savage called a meeting with EcoVersion, where the council was told by Mr Merrie that a processing plant was being built with parts from China and processing of the stockpile would begin later in the year. But before this happened, the pile would grow to nearly a million tyres, Mr Savage said.
He was sceptical of the need to build such a giant black-rubber dump.
He said the depot was locked by the council over fears the tyre mountain might become a semi-permanent blot on the landscape. "The worry is we'll never get rid of these tyres."
Back in Frankton, only half of the pile has been removed, and the Hamilton City Council confirmed that EcoVersion had until the end of this month to complete the job.
According to a High Court judgment, Mr Copsey was bankrupted in 2013 over a Westpac loan he had guaranteed but which had been taken out by his brother Brian.
Reached for comment this week, Mr Merrie initially denied any involvement with EcoVersion. He said the Hamilton City Council was mistaken in describing him as the company's principal.
According to the Companies Office, Shelley Merrie, listed as the sole shareholder of EcoVersion, lives in the same house as Alan Merrie. She is understood to be his daughter. He also filed the forms making her the sole director. She was similarly reluctant to talk tyres when contacted.
Merrie Snr made headlines in 2001 when he fronted a bid to take over the listed Wilson Neill, owner of the Cobb & Co restaurant chain, which ended with the company liquidated and Merrie bankrupted.