Restructuring of Large Healthcare Group

This significant restructuring of a large healthcare group involved the Landlord creditors of more than 100 care homes, two major clearing banks who provided significant facilities to the company and numerous other banks who provided funding to the Landlord creditors.

The Bank was being asked to fund losses at the care home whilst CQC issues, including standard of care and safeguarding issues, were being addressed. Uniquely, this was an incorporated partnership, and as such, risks surrounding creditor pressure fell on the partners’ covenant.

We were initially appointed LPA receivers of the home and continued seamless trading with Bank support, pending a sale.

Work undertaken

The work undertaken by our team during the sales process involved the preparation of the initial marketing material and its distribution to selected parties. This attracted a number of potential buyers which were shortlisted following face-to-face meetings. Turnaround of offers was tight, with receipt of initial offers required within seven business days and final offers within ten business days. The team also negotiated with larger contingent creditors to agree final settlement figures at advantageous levels.

Our specialists provided cash management and guidance throughout the process, as well as managing key stakeholders, including funders, regulators, key creditors, and other equity interests. Ongoing support was provided post-transaction to ensure the smooth transition and orderly wind-down of remaining operations.

Outcome

The ultimate outcome was the concurrent completion of three separate transactions, to three unconnected purchasers, all within 17 business days following instruction. This left a surplus available to shareholders after settling all liabilities.

The solvent disposal of this business resulted in significant shareholder value being protected at a time when insolvency appeared inevitable.

This case provided a significant insight into the problems faced by a care provider of this size and the resultant issues for CQC, Local Authorities and Central Government when a provider of this size is in financial difficulty and under threat of discontinuing trade. There was a significant effort by all stakeholders to recognise these issues and act in a socially responsible way.