ICSM Business – Care Home Sector Insolvency News: a rare piece of good news as a deal is struck to pay staff in full following collapse of three care homes into administration

By Harry Mottram: In a rare move following the liquidation of a group of care homes the staff will be paid in full by a deal struck with the bank and administrator rather than having to claim through the Redundancy Payments Service.

Writing in the website Insolvency Insider, the editor and journalist Dina Kovacevic reported: “The administrators of three care homes have managed to secure a deal with the bank that will see all staff who stayed on to care for residents paid in full, despite the closure of the homes. Tom Grummitt and Andrew Smith of Bridgewood were appointed as joint administrators of Hantona, which operates The Old Rectory in Swanage and Delph House in Poole, and Warwick Park House, which runs the Warwick Park Care Home in Plymouth, on 17 January. The appointment followed an announcement by management of the three homes that they planned to cease trading due to financial difficulties.”

Ian Carrotte of ICSM - the business membership group dedicated to fighting bad debts and late payers with many members involved in the health, care and medical sectors – said: “One of the disgraces of firms who go bust is not just the trail of debts they leave but their total lack of care they have for staff. They are often asked to stay on with no certainty of being paid as though they were expendable. Thankfully Bridgewood who are handling the administration of Hantona have come up with a deal with the bank that sees £73,000 available to pay the 113 staff members. Otherwise, they would be deemed as unsecured creditors.”

If the deal had not been struck then the administrator would have applied for the staff to be paid through the Redundancy Payments Service which would have taken more time. The Government service allows for unpaid workers in the case of a collapsed company to be paid up to eight weeks in wages and within six months of being dismissed.

The care homes industry has been hit badly by the Cost-of-Living Crisis that has seen interest rates increase, fuel and energy prices hiked, Brexit causing a migration of staff from the UK, low wages that discourage recruitment and the Covid-19 crisis that saw a huge rise in deaths. That resulted in families pulling their elderly or vulnerable relatives out of care homes in order to lessen the danger of Covid infection. Local authorities have also failed to maintain payments in line with inflation to pay for places in the care homes which is another factor in many care homes going bust.

Sam Lewis of the Care Home Professional publication reported: "The Old Rectory and Delph House were both operated by of Hantona, while Warwick Park Care Home was operated by Warwick Park House. Jacqueline Haigh was the sole director of both companies. All three properties will be put on to the market, with the proceeds of the sales being used to repay creditors."

The publication also reported on what the administrator said were the reasons behind the deal: 

Tom Grummitt and Andrew Smith of insolvency firm Bridgewood were appointed as administrators on 17 January but were unable to secure the future of the homes as the closure plans were already well advanced.

Tom Grummitt said: “By the time we were appointed, some residents had already left and some of the local authorities which funded the majority of places had terminated their contracts. After taking account of this and the financial position of the homes, it was clear that we would be unable to continue to trade the homes and sell them as a going concern, so our priority was to ensure the safe relocation of the remaining residents.

“Staff worked tirelessly to maintain the quality of care and support the relocations, and we are very grateful for their efforts. Unfortunately the timing of the closures meant that under insolvency rules, they were not entitled to be paid as an expense of the administrations and would have to join the queue of creditors awaiting payment, behind the bank and HMRC."

Below are some recent casualties in the industry:

HEALTH, MEDICINE, AND CARE HOMES

 

ADMINISTRATORS APPOINTED

LUMIRADX GROUP LIMITED    09198288

LUMIRADX INTERNATIONAL LTD    09124383

MEDICAL INNOVATIONS CENTRE LTD    11986463

 

CREDITORS’ VOLUNTARY LIQUIDATION DEEMED IN CONSENT MEETINGS

ABERDEEN HOUSE CARE LIMITED    07658860

CAREWEST LTD    05180427

JOHN DENT (CHEMISTS) LIMITED    00374708

 

CVL LIQUIDATORS APPOINTED

BATEMAN OPTICIANS LTD    08746027

 

PETITIONS TO WIND UP

COMFORT HEALTHCARE SERVICES UK LTD    08661096

COMPLETE COMMUNITY CARE MIDLANDS LIMITED    07770118

WADSWORTH CARE HOMES LTD    11456228

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ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com