21st February 2024

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

Bridgewood – the Nottingham-based insolvency firm part of the DSW network – has agreed to a deal with the bank to ensure that staff at three care homes who stayed on to care for residents when the homes went into Administration will be paid in full.

Bridgewood insolvency

Tom Grummitt and Andrew Smith of insolvency firm Bridgewood were disappointed that, under insolvency legislation, the 113 carers who helped to relocate residents would not be entitled to their total wages from the date of the Administrations onwards but would have to join the queue of unsecured creditors.

This is because all residents were successfully relocated, and staff were made redundant within 14 days of the beginning of the administration, during which time staff contracts were not adopted. Had the work been completed after this period, staff wages would have been payable as an expense of the Administration. In an unusual move, the Administrators approached the bank, which agreed to cover the total 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 Administrator on 17 January but could not rescue the homes as going concerns as the closure plans were already well advanced.

Tom Grummitt said: “By the time we were appointed, some residents had already left, and some of the local authorities that funded the majority of places had terminated their contracts. After considering this and considering the homes’ financial position, it was clear that we would be unable to continue to trade the houses 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 that it has 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.”

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