Our business rescue team have successfully advised a number of struggling North West based care home business resulting in positive outcomes for the businesses, residents and staff.
Craig Johns, of the Insolvency Experts explains further.
What were the issues?
The business operated multiple care homes all of which were occupied with residents receiving specialist care. In light of the vulnerable nature of the residents, this was considered a highly sensitive assignment, with the support and future care of these individuals of paramount importance.
There were also in excess of 100 employees across the sites.
The business was insolvent on both a cash flow and balance sheet basis. A number of suppliers and providers had halted their supplies and the business was under the immediate threat of a winding up petition.
The prospect of any additional sources of funding or investment had been exhausted, with the business having no prospect of being able to continue to trade in its current form. In the event that the business was closed down, all employees would be made redundant, and all residents would need to be relocated. There was a risk to residents’ health in the event of a relocation.
What did we do?
Our team immediately commenced a short term marketing campaign of the business and assets. We also engaged with the Local Authority and CQC to discuss the position, and to ensure plans were in place in the event a business sale could not be achieved, and a relocation of residents was necessary.
We managed the short term trading and cash flow of the business, during the marketing period and ensured the business was protected from creditor action.
Consultations were held with employees, residents and their families to advise of the position and strategy regarding a proposed sale, and an appropriate action plan should this ultimately not be achievable. Similar liaisons were held with the NHS regarding the strategy and potential novation of contracts should a buyer be found. All secured creditors were reported to on strategy and estimated outcome.
What was the outcome?
Following a period of marketing, a sale of the care homes was ultimately achieved to separate parties. The sale ensured continuity of care and homing for all residents, with no requirement for relocation. It also preserved the employment for the majority of the workforce, with redundancies being limited to very few individuals.
As a result of the sales, the existing contracts with the NHS and other entities were able to be novated, thereby ensuring further continuity of care.
Being brought into the situation at earliest possible stage was crucial to the Business Recovery team securing the positive results outlined above. It afforded us sufficient time to fully understand the issues which the business was facing and the negative implications to the residents and employees should the business fail.
We were able to put in place a full strategy and properly advise the directors on a short terms basis. This in turn led to a successful sale, allowing the business to continue trading with current suppliers/contractors and safeguarding the needs of residents and protecting employment.