Care-home group rescued via pre-pack — the numbers

92 residents in three homes needed continuity of care under Care Act 2014 duties. A marketed sale would have taken 4–6 weeks; the CQC (Care Quality Commission) had already flagged safeguarding concerns. SIP 16 pre-pack allowed day-1 signature, transfer of the CQC registration process, and no gap in resident funding under local authority DPS contracts.

CQC registration doesn't 'transfer' — the new operator must apply under Health and Social Care Act 2008. In this deal the buyer submitted its own registration 6 weeks pre-appointment (as a nominated buyer), giving CQC time to assess. On day 1 the buyer's registration went live and the seller's was cancelled. CQC processing typically 8–12 weeks — plan backwards.

It can if the buyer entity is already a registered provider or has an in-flight application. First-time providers usually wait 12+ weeks. The buyer here was an existing multi-site operator with 4 CQC registrations already — meaningful accelerator. Sell Ltd's care-sector deal register: 74% of care pre-packs use existing-provider buyers.

All 6 local-authority Dynamic Purchasing System contracts continued under a 'novation by conduct' — LA social services teams accepted the change of provider within 48 hours because resident placements couldn't be moved. Formal novation deeds signed within 8 weeks post-completion. Never assume — get the LA on a call inside week 1.

The administrator's SIP 16 statement (published within 7 days per Insolvency Service rules) explained: (1) marketing period was pre-appointment 4 weeks with 3 buyers approached, (2) valuation from independent healthcare-property specialist, (3) consideration exceeded liquidation-basis valuation by 34%, (4) no connected-party sale. Creditor challenge deadline lapsed after 28 days with no objection.

148 employees TUPE'd under reg 4 (nurses, HCAs, kitchen, admin, maintenance). RPS statutory relief covered £486k (notice, capped redundancy, holiday, wage arrears). Buyer inherited £71k of above-cap arrears (senior managers, registered nurses on £45k+) and £42k of NEST pension arrears. Zero redundancies post-transfer — care ratios required all staff.

Freehold properties in the 3 homes were owned by a related PropCo, not the OpCo. Deal structured as OpCo asset sale + freehold property sale (2 homes) + lease assignment (1 home). Combined property value £3.4m at 8.2% cap rate on £280k annual rent — separate £3.4m consideration to secured lender.

A CQC 'inadequate' rating on one of the three homes. The buyer negotiated a 6-month improvement covenant with CQC (informal, not binding), backed by a £150k improvement capex plan and a Registered Manager change. If CQC had issued an enforcement notice pre-completion the deal would have collapsed.

Reputational contagion. Marketed care-home sales attract press attention and family anxiety — resident occupancy typically drops 12–18% during a 6-week marketed process. The pre-pack meant resident families learned about the change alongside the continuity commitment, not before. Occupancy stayed at 89% through cutover.

Yes — a connected-party allegation. The buyer's operations director had briefly consulted for the seller 4 years earlier. The Pre-Pack Pool review (Voluntary Regulation of Pre-Pack Sales 2021) gave a 'case not made' opinion which the administrator addressed with additional evidence of arm's-length pricing. Pool clearance issued 9 days post-completion.

£4.8m revenue (from £4.6m TTM at appointment), £680k EBITDA (from £110k). Uplift drivers: renegotiated agency-staff contracts (£240k saved), new food-supply consortium (£90k), CQC 'good' rating regained (allowed fee uplift with LAs, £180k). 15% EBITDA margin against sector average of 11%.

£1.6m consideration ÷ £110k TTM EBITDA = 14.5× at appointment. Post-recovery: £1.6m ÷ £680k = 2.4× EBITDA. The high headline multiple reflects the paper-thin EBITDA at appointment — sector medians would say a healthy care group trades 6–8× EBITDA. On stabilised EBITDA the buyer paid ~2.4×.