Administration of Charitable Care Group

Moorfields were appointed as Administrators over a charitable organisation operating four nursing homes in the North East of England. The group provided residential and nursing care but was experiencing financial difficulties due to operational inefficiencies and loss-making divisions.

Of the four homes, three were trading at full occupancy but at a small loss, while the fourth home had already been closed prior to the appointment. The group had three secured creditors, including a first-ranking lender owed approximately £1.6 million, a second-ranking lender owed around £400,000, and a secured lender over the closed home owed £420,000.

Moorfields were appointed to stabilise the group’s operations, reduce losses, and achieve a sale of the trading homes to maximise creditor recoveries.

Objectives

• Close underperforming operations, including the underutilised head office and a loss-making café
• Achieve operational cost savings through contract renegotiations and supplier changes
• Maintain care quality and compliance while improving financial performance
• Return the trading homes to profitability to enhance value ahead of sale
• Maximise realisations for secured creditors through a going concern disposal

Moorfields’ Actions

• Retained the services of the residential care consultant who had been advising the charity pre-appointment to provide sector continuity and operational expertise
• Notified the CQC and Durham County Council of the appointment, gaining their support and cooperation throughout the process
• Held meetings with staff, residents’ families, and key stakeholders to provide transparency and reassurance regarding the continuity of care
• Produced rolling 13-week cashflow forecasts to monitor financial performance and secured agreement from the first-ranking lender to fund any short-term trading losses
• Engaged specialist care sector property agents to advise on and market the trading homes
• Revised the pricing strategy following a muted response to initial marketing, subsequently instructing new agents to achieve improved market engagement
• Appointed a local agent to negotiate with the Homes and Communities Agency regarding the sale of the closed home, which formed part of a planned redevelopment scheme

Results

• The head office and café were closed shortly after appointment, achieving immediate cost savings and necessary redundancies
• The three trading homes returned to profitability during the administration period
• The business and trading homes were sold for approximately £1.7 million, generating a net trading surplus of £335,000
• The closed home was successfully sold to the Homes and Communities Agency for £160,000
• The first-ranking lender was repaid in full from the sale proceeds
• Sufficient funds were generated to provide a distribution to the second-ranking fixed charge holder
• Overall, the administration delivered strong creditor recoveries and preserved high-quality care standards throughout the process