Deal hope to ease care homes crisis

Stricken care homes provider Southern Cross was today expected to reach an agreement with landlords, banks and the Government to ensure that its 31,000 residents will still be cared for, even if the company were to fall into administration.

The deal, set to be hammered out at a crunch meeting this afternoon, is designed to allay fears that frail and elderly residents may suffer disruption if the company collapses.

It could also help restore confidence in the company, which runs 752 care homes, including two in Oldham, Treelands and Avalon, in a bid to stem the decline in the number of residents.

The meeting could see Southern Cross thrash out the framework for a deal with its landlords and its banks to ensure its future survival.

It is believed the most likely outcome will be that Southern survives the crisis, but with many landlords withdrawing their homes from the company in coming months and running them independently. This would leave the restructured company with a much smaller number of homes.

One insider said it could take days or even weeks to reach a final agreement but it is hoped progress can be made at today’s meeting.

Darlington–based Southern Cross, the UK’s largest care home operator, has been struggling under a £202 million annual rent burden while its own income falls as public sector customers, such as local authorities, make cutbacks.

It has warned it is in imminent danger of financial collapse and recently announced it would cut its rent payments to its 80 landlords by an average of 30 per cent over the next four months to buy it some breathing space.

The company, which employs 44,000 staff, recently revealed plans to cut 3,000 jobs.