Four Seasons falls into administration.

1st May 2019 (updated 8th May 2019).

Four Seasons Health Care, one of the UK’s largest care home companies, has fallen into administration following months of uncertainty and a lengthy struggle to ease pressure from debts.

The group, which has ties to private equity firm Terra Firma but is effectively controlled by H/2 Capital, has appointed administrators from Alvarez & Marsal to try and secure a sale of the business, with any potential buyer hoped to cover its debts.

The company houses 17,000 elderly patients and employs 20,000 staff.

Debbie Westhead, chief inspector at the Government’s Care Quality Commission, said it would advise local councils if there was a risk of care services being halted, but stressed: “We do not believe this to be the case at this time.”

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.”

Alvarez & Marsal will now attempt to sell Four Seasons out of administration, allowing any potential buyer to avoid picking up its debts.

More than 400 UK care home operators have collapsed in the past five years, according to BDO, including 101 last year.

Four Seasons is the biggest care home group to have gone into administration 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.

Care home operators continue to struggle

Businesses in the UK care home sector have faced difficult market conditions in recent years, as funding from local authorities for elderly care remains on a long-term decline.

Care for the majority of Four Seasons’ residents is funded by local authorities, with the fees paid by councils for care services significantly decreasing in recent years.

GMB national secretary Rehana Azam observed that “the possible collapse of Four Seasons shows our care system is in crisis,” adding: “It is crumbling beneath us because the funding isn’t there.”

Rise in insolvencies across sector

As a result of challenging market conditions and decreasing income from local authorities, care home operators have collapsed in concerning numbers in recent years.

Research conducted by BDO indicates that more than 400 British care home operators have fallen into insolvency over the past five years, with 101 businesses collapsing in 2018 alone.

As of this month, all four of the biggest care home operators in Britain — HC-One, Four Seasons, Barchester and Care UK — are trying to find buyers.

However, the fact that many of the homes are funded by local authorities makes securing a sale more difficult, as confidence amongst commercial property investors continues to be dampened by Brexit-related uncertainty.

Do you supply goods and services on credit?

If so, the above news will be of concern.

Any time a big business goes into administration, it usually means its creditors, those who supplied it with goods and services on credit will lose out.

However, The Credit Protection Association can help!

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Read our blog here on how to crack down on the late payment culture.

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