Southern Cross collapse leaves elderly care in limbo

The grim truth about the demise of care home company Southern Cross was confirmed to its shareholders yesterday in an extraordinary meeting which followed news of its closure on Monday.

Investors are likely to receive "little or nothing" after Southern Cross's landlords decided in their droves to opt out rather than reduce rents, making it impossible for the company to remain in business.

There was little to cheer or enlighten elderly residents of its 752 care homes despite repeated reassurances from the Government that no one will end up homeless.

Many of the known 80 landlords own only one home – and in most instances are incapable of taking over the running of the care home from Southern Cross, leaving the futures of thousands of people up in the air. Such landlords have a maximum of three months to find a buyer or an alternative care provider.

One such example is Kenilworth Grange Nursing Home in Warwickshire, which has 60 beds, and is the only care home owned by The Scottish American Investment Company Plc. The company, which counts the former Liberal Democrat leader Sir Menzies Campbell and the former British ambassador to Washington Lord Kerr of Kinlochard among its directors, said it was in negotiations with a "major care provider" – but nothing has been finalised.

Several of the bigger landlords, including Four Seasons and Bondcare, confirmed they would take over the running of their homes from September. Bondcare, which has the capacity to run 250 homes, could mop up others that face uncertainty.

The closure of Britain's biggest private social care provider, which has 33,000 residents, has thrust care of the elderly up the political agenda as Britain struggles to cope with an ageing population while public spending is cut. It adds pressure on ministers to deal with growing instability in the sector, which has a £500m-a-year funding shortfall from councils, according to Age UK.

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