Southern Cross given four months to find solution

The firm's landlords say they have made "significant financial concessions" to avoid closing any homes

Care home operator Southern Cross has reached an agreement that gives it four months to find a solution to its financial difficulties.

Southern Cross will continue to run all 751 care homes during that time.

The process will be overseen by a restructuring committee consisting of representatives from the Darlington-based company and its 80 landlords.

Social services directors in England welcomed the announcement, but called for more information about the plans.

The process is still expected to lead to hundreds of its care homes being run by other operators.

Southern Cross, its landlords and other creditors held crisis talks on Wednesday.

Government representatives were not present at the meeting, but a Department of Health spokesman said the government had been "in constant contact over the course of discussions and remains ready to talk to all parties".

"There is likely to be a series of meetings in coming days over the future of Southern Cross. Government is clear that all parties must work together to agree on a plan that will safeguard the continuity of care of residents," the spokesman said.

'Full support'

Southern Cross and its landlords issued a joint statement after the meeting.

"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," it said.

"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."

At the end of the process, Southern Cross is expected to end up operating under a different name with between 250 and 400 of its current 751 care homes.

Other operators will run the rest of the homes.

However, while welcoming the announcement as providing "great comfort" to thousands of older people, the group which represents social services directors in England said it wanted more information about the restructuring.

"It is clear that despite today's (Wednesday's) hard work by the parties involved, directors and their colleagues in local authorities throughout England and beyond will not have been given sufficient details of the shape of the future company: details which would help the important and well thought through contingency planning in which we have all been involved," said Peter Hay, president of the Association of Directors of Adult Social Services (ADASS).

"The issue is the important one of confidence, and of ensuring that current residents of Southern Cross homes, as well as people who might be considering buying a place in one for themselves or for a relative, share in that confidence."

The ADASS, whose members buy places in Southern Cross homes, added that unless the firm acted rapidly, there was a real danger it would lose business and market share.

Last month, Southern Cross said that it would stop paying about a third of its rental bill.

It is the UK's largest care home operator with 31,000 residents, employing 44,000 staff, of which the company has already said it will cut 3,000.