Administrators strike deal with bank to cover staff pay after care homes closure

Delph House

An East Midlands insolvency firm handling the administrations of three care homes has agreed a deal with a bank to ensure that staff who stayed on to care for residents will be paid in full, despite the closure of the homes.

Under insolvency legislation, the 113 carers who helped to relocate residents would not be entitled to their full wages from the date of the administrations onwards, but would have to join the queue of unsecured creditors, said Tom Grummitt and Andrew Smith of Nottingham-based administrators Bridgewood.

This is because all residents were successfully relocated and staff made redundant within 14 days of the administrations beginning, during which time staff contracts are not adopted. Had the work completed after this period, staff wages would have been payable as an expense of administrations. In an unusual move, the administrators approached the bank – a creditor of the failed care homes – which agreed to cover the full wage bill of around £73,000.

Management of the three homes – The Old Rectory in Swanage, Delph House in Poole and Warwick Park Care Home in Plymouth – announced in December that they planned to cease trading due to financial difficulties. Bridgewood was appointed as administrators on 17 January but were unable to rescue the homes as going concerns as the closure plans were already well advanced.

Grummitt said: “By the time we were appointed, some residents had already left and some of the local authorities which funded the majority of places had terminated their contracts. After taking account of this and the financial position of the homes, it was clear that we would be unable to continue to trade the homes and sell them as a going concern, so our priority was to ensure the safe relocation of the remaining residents.

“Staff worked tirelessly to maintain the quality of care and support the relocations, and we are very grateful for their efforts. Unfortunately the timing of the closures meant that under insolvency rules, they were not entitled to be paid as an expense of the Administrations and would have to join the queue of creditors awaiting payment, behind the bank and HMRC.

“We felt this was extremely unfair considering all the hard work staff had put in and spoke to the bank about the situation. We are pleased to say that it has very generously agreed to put up the funds to cover the full wage bill of around £73,000, and that staff will now be paid in full.”

The Old Rectory and Delph House were both operated by of Hantona, while Warwick Park Care Home was operated by Warwick Park House. Jacqueline Haigh was the sole director of both companies. All three properties will be put on to the market, with the proceeds of the sales being used to repay creditors.

Bridgewood is part of the Dow Schofield Watts network.