Southern Cross in crisis meeting

15 June 2011 Last updated at 09:34 GMT The firm's landlords say they have made "significant financial concessions" to avoid closing any homes Landlords at troubled care home provider Southern Cross have pledged to do all they can to help it avoid bankruptcy, the BBC understands.

Southern Cross is to hold a crisis meeting with landlords, lenders and the Department of Health later.

Of central importance is how to ensure continuity of care for the 31,000 people at the firm's 751 care homes.

The care home provider says it cannot afford to pay the full rent on its homes.

Landlords will agree to a compromise in order to allow the care home provider to remain solvent, the BBC's business editor, Robert Peston, has learned.

The restructuring may leave the Darlington-based firm with just 250 to 400 homes, with the others being taken over by different care providers.

But the biggest landlord, NHP, which owns 249 of the homes, is expected to stick with Southern Cross.

The government has been putting intense pressure on landlords not to abandon Southern Cross altogether, according to Robert Peston.

Quid pro quo

Southern Cross said last month it planned to stop paying about a third of its rental bill.

The company's landlords met on Monday, and are expected to table their own proposal for the firm's future at the meeting on Wednesday.

"The landlords have agreed in principle that they will make significant financial concessions in order to achieve a sustainable solution," said Daniel Smith, who chaired their meeting on Monday.

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Under pressure from the Department of Health, they [the landlords] have agreed to do all they can to help Southern Cross avoid bankruptcy”

End Quote Robert Peston Business editor, BBC News "Our overriding concern at this time remains minimising disruption and concern for residents and their families."

In return, it is expected that the government and lenders will also agree to write off some of the money Southern Cross owes them.

Under their joint proposal, individual landlords would reportedly be given various options, including:

taking back homes and running them themselvestaking back homes and bringing in a new operatorsticking with Southern Cross, who would bring in new management.

Southern Cross is the UK's largest care home operator, employing 44,000 staff, of which the company has already said it will cut 3,000.

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