Care home firm deal to secure future of residents

The deal, hammered out at a crunch meeting, 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, in a bid to stem the decline in the number of residents.

Southern Cross also said it was working towards a solution to its financial woes, which it hoped to deliver over the next four months.

However, it is expected that many of its 80 landlords will withdraw their homes from the group in the coming months to run them independently.

It is not yet clear how many landlords will walk away from the group but it is expected that Southern Cross will ultimately be left a much smaller company.

A company spokesman said: “At a meeting today, Southern Cross, its lenders and the Southern Cross Landlords’ Committee reached an agreement to ensure that the continuity and quality of care to all 31,000 residents will be maintained and that every resident will continue to be well looked after.

“The company and the landlords will work towards a consensual solution to the company’s current financial problems which will be delivered over the next four months.

“This process will be overseen by a Restructuring Committee made up of representatives of the Landlords’ Committee and the company.

“The business, including the delivery of care, will continue to be the responsibility of the Southern Cross Board, management team and staff who have the full support of both the landlords and lenders in the delivery of this important task.”

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

Southern Cross made losses of £31m in the six months to March 31. The company also runs homes under the Ashbourne Senior Living brand.