Allied Healthcare: Home care provider seeks rescue plan
One of the biggest providers of UK home care is in financial difficulty.
Allied Healthcare, which cares for 13,500 elderly and vulnerable patients across the UK, is set to file for protection from its creditors due to a "highly challenging environment".
The company said it would continue to provide care and there would be no redundancies.
"Councils have robust contingency plans" to manage care, the Local Government Association said.
Allied employs 8,700 people and is owned by a private equity firm.
The home care visits it arranges help people live independently and can include cooking and cleaning, managing medication and overnight stays.
Allied, which also offers learning disabilities support services, has 150 contracts with local authorities in England, Scotland and Wales.
"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, which has placed pressure on the company," a company spokesperson said.
"As a result of these challenges, Allied Healthcare has taken the decision to pursue a Company Voluntary Arrangement (CVA)."
Allied said there will be no redundancies or branch closures as a result of the CVA plan being implemented.
BBC business correspondent Joe Lynam said the CVA would allow the company to pause repaying some creditors – including its pensions contributions – while the future of the business is sorted out.
It will "shield them from some of their debts while they get their house in order financially", he explained.
Changes to the Care Act, which came into effect in 2015, means that if a provider like Allied were to stop trading, local authorities would step in to protect individuals receiving care.
The Local Government Association, which represents local authorities, said it was working alongside the Care Quality Commission and government to support Allied where possible.
An LGA spokesman said: "The absolute priority for councils affected is to protect the vital care and support that older and disabled people rely on and ensure it is able to continue without interruption.
"Councils have robust contingency plans in place to manage the care of individuals if necessary."
Last year, HMRC ruled carers sleeping overnight should be be paid the national minimum wage for all hours, as opposed to a flat rate, and that social care providers will be required to make back-dated payments for these stays.
At the time the charity Mencap warned about the "devastating" financial impact of the changes, claiming the total bill to social care providers for back pay – in some cases dating back six years – could be £400m.
It is understood Allied's bill could amount to £11m.
A Department of Health and Social Care spokesperson said the government would "continue to monitor the financial stability" of Allied and other adult social care providers."