Care Home Case Study

The client had a 58-bed purpose built Care Home. It was fully compliant with national required standards for such homes, with a steady workforce and good occupancy levels. However, there were two main problems. The business was very profitable but all the money was withdrawn to fund an expensive lifestyle. The net result was a reducing balance sheet, which concerned the client’s existing lender to such an extent that the client was transferred to Specialised Lending, i.e. Recoveries. A date was set by the lender for the mortgage to be repaid and if not, a Receiver would be appointed.

• The client had to carry out some necessary building works. Previously, his bank manager had given his verbal authority to spend the money but nothing existed in writing. This meant that the client exceeded his overdraft well beyond the limit sent by the bank and cheques were being returned unpaid. Understandably, relationships had become very soured.

Our consultant met with the client and, because of the time constraints, immediately prepared a full presentation to a more sympathetic lender.

After a meeting with the client, his accountant and the new lender, a new facility was agreed. A total of £1.4m was advanced to pay off the original mortgage and overdraft and give him sufficient working capital to finish the building works.

The real bonus was that the loan was accepted by the new lender at a better rate than before, with lower charges and fees throughout the term of the loan.

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