Gov’t poised to rescue residents if Southern Cross fails
Gov’t poised to rescue residents if Southern Cross fails
- Story by: Marc Shoffman
- Magazine: FinancialAdviser
- Published Thursday , June 23, 2011
The government has insisted that arrangements are in place to protect residents if troubled care homes operator Southern Cross fails.
He said: “Clear arrangements are in place to deal with a catastrophic failure, which I think is now increasingly unlikely. More importantly, we need to ensure that we learn lessons from past care home closures and take them into account in future.
“However, we can also be clear that the underlying viability of this business is strong indeed. We need care homes, and that is why we now have a route towards a solvent restructuring of the business.”
He added: “This is a commercial sector problem, and we look to the commercial sector to solve it.”
It comes after Southern Cross, the UK’s largest care homes operator, and its landlords issued a joint statement pledging that “all 31,000 residents will be maintained and that every resident will continue to be well looked after”.
It said: “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.”
Christopher Fisher, chairman of Southern Cross, said: “This is a most welcome development, which puts an end to the recent unsettling period of uncertainty for our residents and their relatives.
“The company is focused on working towards a consensual solvent restructuring. We thank our landlords and lenders for their support and will work with them over the next four months to finalise the future arrangements for our homes.”
Jamie Buchan, chief executive of Southern Cross, said: “All of the staff at Southern Cross have an important job to do in continuing to deliver excellent standards of care through the restructuring that will now be undertaken. I am pleased to have the support of our landlords, lenders and government as we carry out this important task.”
Philip Spiers, director, private sector of FirstStop Advice, said: “Although latest reports indicate that a rescue package is likely to succeed and the tenure of its residents secured, it raises the question of what could have been done to avoid this situation and what concerns the regulators should have for the future of the care home sector.”
