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Allied Healthcare Seeks Creditors’ Backing for CVA Rescue Plan

Written by: Keith Tully

Published: 26th April 2018

Allied Healthcare Seeks Creditors’ Backing for CVA Rescue Plan

The home care provider Allied Healthcare is seeking the backing of its creditors for a rescue plan that bosses hope will enable it to stave of administration and collapse.

Allied, which is owned by a private equity firm, employs roughly 8,700 people and provides care for more than 13,000 elderly and vulnerable people throughout the UK.

The company has around 150 contracts with local authorities in England, Scotland and Wales but has found itself increasingly in financial difficulties in recent quarters.

Those difficulties have now put the business in the position of needing to seek the support of creditors for a Company Voluntary Arrangement (CVA), which would aim to put the organisation on a more sustainable financial footing.

Operators within the UK’s domiciliary healthcare sector have seen their finances put under significant pressure of late in part due to increases in the national minimum wage and cuts to fees paid for home care services by local authorities.

Another problem for the sector has been that last year HMRC ruled that carers should be paid at minimum wage levels for time spent sleeping during overnight shifts, where they would previously only have been paid on a flat-rate basis.

That ruling has created major issues for care sector employers, particularly because HMRC decided that carers should be entitled to claim back pay for hours they’d worked on lower than minimum wage rates.

Allied Healthcare has said that its CVA deal, if agreed, will “not impact the safe continuity of care” that it provides throughout the UK.

The company has also insisted that the rescue plan would not involve the closure of any of its branches or require any redundancies to be made.

“As with many independent providers in the UK health and social care sector, Allied Healthcare has been operating in a highly challenging environment for a sustained period of time,” a statement from the company has said.

“As a result of these challenges, Allied Healthcare has taken the decision to pursue a CVA as part of a prospective business plan that will ensure safe continuity of care across our UK-wide operations, place the company on a sustainable long-term footing, and maximise repayments to creditors.”

Keith Tully

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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