GMB Union Concerns As Four Seasons Health Care Goes Into Administration
30th April 2019
Four Seasons Health Care Administration.
Responding to this morning's announcement that one of the UK's biggest care home providers, Four Seasons Heath Care, has entered administration, GMB Scotland Senior Organiser Drew Duffy said: "This is yet another case in point of the crisis in our care sector.
The group serves about 17,000 residents and patients and employs some 20,000 staff. The company is struggling to pay its debts. Four Seasons has around 300 plus homes.
"Our immediate priority is the safeguard of our members' jobs and conditions across Four Seasons homes in Scotland and to help tackle any uncertainty for an estimated 1,800 service users and their families.
"That's why we have asked for an urgent meeting with the Scottish Government and COSLA representatives. We will also continue to work with our union across the rest of the UK and in our engagements with the employer, administrators and the UK Government.
"Four Seasons is just the tip of the iceberg and there is a far wider debate that needs to be had about the sustainability of our care sector in its present form.
"Let's be clear that the public purse is largely funding these failing providers and the financiers behind them, while the rights of workers at the coal face, mainly low paid women, are constantly under attack. This is a toxic mix for staff and service users alike.
"If we leave this unchallenged then we will only continue to revisit the problems we are facing today in Four Seasons elsewhere in the sector. This must stop and the sector must change."
Four Seasons has appointed professional services firm Alvarez & Marsal (A&M) to handle the administration.
In November 2015 the company planned to sell 14 care homes as going concerns, and "a portfolio of homes currently run by third party operators" to assist its liquidity problems, hoping to raise £60 million. It has £565 million worth of debt, with annual interest and rent obligations of about £110 million. It later announced plans to close seven homes in Northern Ireland: Victoria Park and Stormont in Belfast; Antrim; Garvagh; Donaghcloney near Banbridge; Oakridge in Ballynahinch, County Down; Hamilton Court in Armagh.
In December 2015 it was reported that the company had sold £20 million worth of properties to Monarch Alternative Capital, a US investment fund which claims to specialise in swooping on "distressed and bankrupt" companies.
In April 2016 it reported a 39% drop in profits which was blamed on the cuts in the local government social care budget and the introduction of the UK living wage, although its average weekly care fees rose by 3.4 per cent. The company has net debt of £565 million, because Terra Firma borrowed heavily to fund the purchase in 2012. The business has to find annual interest payments of about £50 million. Earnings before interest, tax, debt and amortisation fell from £64.1 million in 2014 to £38.7 million in 2015. Its property portfolio has been revalued down by £224 million to £505 million and its credit rating has plummeted.
In September 2017 the Daily Telegraph reported that a legal mistake meant that bondholders had inadvertently already been given ownership of 71 private patients care homes and hence could not use them as security to raise extra money. A High court hearing led by the a major bondholder -the US hedge fund H/2 Capital Partners -was scheduled for April or June 2018 but the firm was unlikely to be able to restructure before then. The following month the company warned it couldn't meet a £26m payment due in December without restructuring and if this was delayed the bondholders could potentially seize its assets of 360 nursing homes. This would probably lead to an intervention by the Care Quality Commission (CQC). A restructuring was planned for November and Four Seasons' owners would add 24 care homes in exchange for reduced and delayed repayments of 175m of bonds maturing in 2020. In December the company narrowly avoided collapse after the principle bondholder agreed to wait until February 2018 for a restructuring proposal. According to the Telegraph the cause of the Four Season's problem is a 90% reduction in the number of EU nurses and a cut in state funding.
In October 2018 H/2 Capital Partners replaced the management and put the business up for sale.
Some 410,000 older people live in care homes in the UK, according to official figures, receiving everything from specialist dementia care to less complex nursing and bed and board. ... Today, 95% of the 11,300 care homes for older people are provided by the independent sector (both for-profit and charities).
The problems have been coming for some time -
Quarter of UK care homes 'at risk of closure - https://www.bbc.co.uk/news/uk-36200855
One in six care homes for elderly at risk of failure as sector is 'pushed to brink', research shows -
And then there is low pay
The Scandal of Low Pay in the Home Care Sector - http://www.thepointhowever.org/index.php/issues/207-the-scandal-of-low-pay-in-the-home-care-sector
Thinking About Working In Care - Read this before you do.
Why carers cease caring - https://www.express.co.uk/comment/expresscomment/792419/social-care-workers-quit-jobs-why-pay-travel