Our client, Burlington Care Limited, was purchasing six, financially unviable care homes from the UK’s largest care home operator. The care homes were unviable due to poor reports from the Care Quality Commission (CQC), but Burlington Care aimed to purchase them and turn the homes around. Due to the prominence of the seller, the case was high-profile, and there was a lot of media attention around the seller’s viability.
We led the corporate transaction and coordinated all the other aspects of the transaction working closely across departments, including our experts in property, employment and regulatory law.
The client needed the transaction completed quickly because if recommended action by the CQC was not undertaken within the short period, the CQC rating would drop to a lower level, meaning we had to complete the sale transaction in only a few weeks. As there were six separate businesses, this meant we were essentially completing six transactions, and finalising the following for each of the separate businesses:
- Due diligence;
- Asset transfer agreements (the effective transfer of each care home business);
- Interim management agreements (to deal with the split exchange and completion);
- Debenture over the buyer;
- Working capital facility;
- Ancillary board and shareholder documentation; and
- Property documentation (licence to assign, deed of variation, transfer deeds).
As with any transaction that we work on that involves cross-departmental working, we set up a core project team. Once we understood our client’s objectives, the team were able to work together to ensure a project plan was in place to meet the necessary deadlines. Clarity of the client’s objectives and time frames allowed for the team to plan how to overcome the challenges facing Burlington Care.
One of these challenges was that each property was in a different location, meaning there were different searches and investigations to be carried out for each.
Things were complicated further as there was a requirement for CQC consent in between exchange and completion. This was because the existing consent was in the seller’s name, which was not transferable as the purchaser was purchasing the assets not the shares in the company. Additionally, the purchaser did not want to invest time and money in obtaining CQC consent without being under contract, but at the same time, they could not proceed without obtaining CQC consent, resulting in split transactions and a potential delay to the sale. We managed this by ensuring adequate protection for our client through the contract, and that completion could take place as soon as the required consents were all in place, keeping any delays to a minimum.
This case was kept out of the public eye as much as possible, and the sale fees were undisclosed as it was a distressed sale of six care homes and the operator wished to keep the publicity as low-level as possible. However, selling these care homes to Burlington Care allows them to continue to operate, and Burlington to achieve their goals.
Find out more about how we can support you with the purchase or sale of care homes here.
