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  • 01 May 2019
  • 4 min read

Care homes group Four Seasons calls in administrators

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Care homes giant Four Seasons has collapsed into administration, raising fears for thousands of vulnerable elderly residents.

US hedge fund H2 Capital Partners effectively controls Four Seasons, now in administration

Care homes giant Four Seasons has collapsed into administration, raising fears for thousands of vulnerable elderly residents.

The debt-laden company has appointed corporate undertakers at Alvarez & Marsal (A&M) to carry out the process following an aborted sale attempt.

Four Seasons houses 17,000 elderly residents across 322 homes, although the firm insists that operations will be unaffected by the move.

“The operating companies under which the care home and hospital operations sit are not in administration and continue to be run as normal by the existing leadership teams,” Four Seasons said in a statement.

The collapse is the biggest care homes failure since Southern Cross went bust in 2011.

£525m in debt

Late last year, US hedge fund H2 Capital Partners, which effectively controls Four Seasons, ordered a sale of the crisis-hit company, which is struggling under a £525 million debt mountain.

Four Seasons issued a statement on Twitter to address the matter.

The bulk of the debt is held by H2, which is run by Spencer Haber. Only weeks ago, Four Seasons insisted that it had “sufficient operating liquidity” to be able to complete the sale process.

A&M will now attempt to sell the group out of administration. Dr Claire Royston, group medical director of Four Seasons, said: “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.

“Our priority remains to deliver consistently good care. It marks the latest stage in the group’s restructuring process and allows us to move ahead with an orderly, independent sales process.”

But the failure of Four Seasons caps a sorry saga for the group, which had been owned by Guy Hands’ private equity vehicle Terra Firma.

Terra Firma bought Four Seasons for £825 million in 2012 and has been forced to stomach a £450 million writedown on its investment.

"Today’s news does not change the way we operate or how our homes are run - Dr Claire Royston"

There have been acute worries over Four Seasons’ financial performance and debt pile for several years.

It has been stung by a cut in local authority fees, rising costs and the introduction of the national living wage, and the group has continuously warned over its long-term stability.

Richard Fleming, of A&M, said: “We are committed to ensuring the group delivers continuity of care as we work to undertake the independent sales process.

“The group has continued to improve its quality ratings across their portfolio of homes and hospitals.

“The group’s operations are fundamentally strong and a successful sales process will enhance those operations’ ability to thrive.” Liberal Democrat health spokeswoman Judith Jolly placed the blame on Theresa May’s Conservative Government.

She accused them of failing to confront the “funding and structural problems in social care”.

She added: “Questions must now be answered by the Conservative Government as to how such a major care home group could have gone into administration, potentially putting at risk thousands of people’s care and thousands of jobs.”

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30 Care Homes across Scotland

Scottish Conservative health spokesman Miles Briggs said: “Social care services in Scotland are already over capacity and if any Four Seasons care homes were to close it would have serious repercussions for the provision of social care in that area.

“We need to see urgent steps taken to stabilise the situation and support finding a future for the company.

“It is crucial that the Scottish Government ensures operations at these care homes continue.”

Four Seasons has homes across Scotland including in Edinburgh, Glasgow, Aberdeen, Fife, Perth and Angus.

"This will be a deeply worrying time for hundreds of Four Seasons residents and staff"  - Scottish Lib Dems health spokesman Alex Cole-Hamilton

Scottish Liberal Democrat health spokesman Alex Cole-Hamilton MSP said: “This will be a deeply worrying time for hundreds of Four Seasons residents and staff. People’s jobs and people’s care is being put at risk.”

He added: “This is further evidence that the contemporary model of social care in a care home setting is in fundamental need of a rethink.

“We need an effective and efficient NHS and care system which will be there for our loved ones when they need it.”

Brian Sloan, Age Scotland chief executive, said: “This news demonstrates the significant challenges faced by the social care sector if one of the biggest operators in the business is facing administration.

“No doubt alarm bells will be ringing at the highest levels of the Scottish Government and local authorities, who should be looking at how they ensure continuity of care if no buyer is found for the business."

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