Coronavirus has hit the sector hard, with the repercussions continuing to be felt, and a rising tide of care home insolvencies. 

Some sector pressures have their origins before the COVID-19 pandemic. 2011 saw the collapse of the largest chain, Southern Cross, and Four Seasons, another major provider, went into administration in 2019.

Care home operators typically find it hard to recruit staff, and they carry high employment costs, impacted by the rise in the national living wage.

Staff shortages push up risks and can also mean employers need to rely more on costly agency workers. There are steep insurance costs as well as needing to ensure properties are well maintained.

Without high occupancy, care homes can soon run into debt and there is need to comply with stringent regulation. Whether larger groups or small independents, care homes are an essential industry, but while it may appear they should be successful – fees can be in excess of £1,000 per resident per week – the reality is that costs are significant and profits can be quickly eroded.

Here at Company Debt, we have significant experience in both closing and restructuring care home sector businesses. Get in touch for a free, no obligation discussion about your situation with one of our licensed insolvency practitioners.

Automotive Pressure Points

Reputation damage from pandemic
Regulatory pressures
Staffing challenges and rising wages
Debt Budens to Private Equity

Insolvency Options for the Care Home Industry

If you feel your business is approaching insolvency, you’ll need to be clear about your responsibilities. Once the business is officially insolvent, your responsibilities as director shift towards creditors, not shareholders. If you act in a way which puts any party before your debtors, you may find yourself open to charges of wrongful trading further down the line.

We advise you to take careful advice with an experienced professional such as ourselves, or your accountant. If the business had reached a tipping point, there’s needs to be a clear decision about whether it can be rescued, and how. Or whether the right choice is to opt for voluntary liquidation.

Liquidating a Carehome Business

Voluntary liquidation requires the services of a licensed insolvency practitioner (IP) The IP will deal with creditors on your behalf, sell any corporate assets, then close down the company and divide returns amongst creditors in order of priority. Your powers as a director will cease from the moment of their appointment.

There is also the possibility of a pre-pack sale, a structured debt repayment known as a Company Voluntary Arrangement, or additional financial support utilising debt for equity swaps.

We are fully aware that insolvency processes with respect to carehomes will impact not just directors but the elderly residents themselves. In some cases, processes such as administration can result in the sale of a care home to a third party, minimising the disruption for vulnerable residents.

Directors Redundancy

Many directors don’t realise they may be eligible for redundancy payments when closing an insolvent business. Assuming you’ve worked for your business for at least 16 hours per week over a two year period, and are registered for PAYE, it is more than likely you’ll have a redundancy claim. We will apply for this on your behalf, as part of the liquidation process.

Knowledge – Insight – Solutions

We are fully licensed and accredited insolvency practitioners based in north London, and with decades of combined partner experience in helping directors find positive solutions to business challenges.

Our goal is first to understand your situation as fully as we can, and then to explain the range of options available to you.

We focus on practical advice, without jargon. We practice total transparency around costs and fee structures. Our wish is to support you as fully as possible so that you can emerge from this situation in the best possible situation.

As a first step, simply book in a call with one of our team to learn more about our approach, and to take advantage of a fee consultation that carries no obligation.

Book My Consultation

If you need an experienced insolvency practitioner or business rescue specialist, seek advice now.

  • Your free consultation will be led by one of our experienced London insolvency practitioners
  • You can speak via phone, online meeting or in person so that we can listen carefully to the facts about your situation
  • The team will provide a preliminary view of the likely best outcome, proposed strategy, and the likely cost
  • We specialise in helping limited comany directors needing immediate professional debt advice

 

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