15/11/2011
The number of care homes which have buckled under the weight of their debts has rocketed in the last 12 months, leaving the industry facing the scenario of not having enough beds for those who need them.
According to the latest statistics released, the number of homes which have entered into administration in the year leading up to the end of September 2011 was more than twice as many as that which went under during the same period in the previous year.
More than six care homes went under each month in the last 12 months, with 73 homes forced to concede their debts had become unmanageable. During the previous year, fewer than 3 homes fell by the wayside each month, a total of just 35 and less than half the amount which failed during 2011.
Financial experts have suggested that the reason behind the catastrophic bust rate within the industry at the present is that many firms were forced to borrow heavily in order to keep up with demand and expand more rapidly than recommended. This left hefty debt repayments which became increasingly difficult in a climate of squeezed budgets and rising costs.
As government funding started to decline, a number of care homes became unable to meet their repayments and either sunk or managed to create an alternative rescue package, such as a buy back scheme.
It is not just the smaller homes which have struggled to survive. Some of the biggest groups in the country have been the ones to go under. Southern Cross was one of the most widely publicised care home companies to enter into administration, with 31,000 residents in its care at the time it went under and more than 750 employees around the country.
Whilst the latest casualty is not on the scale of Southern Care, it still has five hundred residents and in excess of 780 members of staff, who are facing an uncertain future since its collapse in the penultimate month of 2011.
Argus Care Group, which is based in Aberdeen, has been confirmed as entering into administration, with its twelve care homes placed in the care of the insolvency specialists with immediate effect.
The administrators appointed to deal with the case are PKF, who have named two experienced care home operators to keep the business going whilst the process is dealt with.
PKF have been quick to reassure residents and their relatives that there will be no changes in the short term and all aspects of the homes will continue to run as normal, whilst the administration is processed.
One of the joint administrators responsible for the group, Bryan Jackson, said that they understood care homes were 'not like any other businesses' and said that 'continuity of care' would be at the top of their agenda.
According to PKF's website, all of the care homes in the group have now been visited to speak to residents and employees, as well as carrying out a quality check on the state of each home.
Mr Jackson added that Argus had been forced to enter into administration due to 'debts and cash flow problems' which he described as becoming 'exacerbated by creditor pressures.' Mr Jackson said that residents, staff and relatives would all be kept up to date on any progress made.
PKF have confirmed they hope to sell Argus as an active business and a going concern for any potential candidate. The company is not a newly formed firm, having been in operation for 15 years, starting in Aberdeen and spreading out across Scotland.
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