Four Seasons Health Care goes into administration

One of Britain's largest care home groups, Four Seasons Health Care, has gone into administration.

Two of the holding companies behind the firm appointed administrators on Tuesday after struggling to repay their debts.

The group serves about 17,000 residents and patients and employs some 20,000 staff.

Four Seasons said the move would not affect care arrangements or lead to the closure of homes.

Group medical director Dr Claire Royston commented: "Today's news does not change the way we operate or how our homes are run or prompt any change for residents, families, employees and indeed suppliers.

"It marks the latest stage in the group's restructuring process and allows us to move ahead with an orderly, independent sales process."

According to Sky News, which first reported the news, it is the biggest collapse of a care homes business since Southern Cross in 2011.

Four Seasons has struggled with cuts to local authority care fees and rising costs, and has repeatedly warned about its long-term stability.

The GMB union said the government needed to step in urgently to reassure Four Seasons staff and residents.

Rehana Azam, GMB national secretary, said: "The possible collapse of Four Seasons shows our care system is in crisis, it is crumbling beneath us because the funding isn't there."

Four Seasons said it had appointed professional services firm Alvarez & Marsal (A&M) to handle the administration.

While the holding companies – Elli Finance (UK) and Elli Investments – are in administration, the operating companies that run Four Season homes are not.

The group said it had secured funding to ensure continuity of care while it seeks a new owner.

Four Seasons, which has 322 residential and nursing care homes, has been struggling to restructure its debt pile of more than £500m.

Terra Firma Capital Partners, the private equity firm led by Guy Hands, bought the group in 2012 for £825m but has since seen a £450m writedown on its investment.

It has also ceded control of the group to US hedge fund H/2 Capital Partners, which holds a large amount of its debt.

A number of care businesses have run into trouble recently, raising questions about the current funding model for social care.

Last year, Allied Healthcare, which supports 13,000 people, said it was struggling with debts, blaming low fees paid by councils.

The Care Quality Commission, a regulator, later issued a notice saying it had serious doubts about the firm's future.

A majority of Four Seasons' operations are funded by the state, with about a fifth of them funded privately.

Analysis: Colletta Smith, consumer affairs correspondent

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