Date03 May 2023
CategoryRestructuring & Insolvency
Blair Milne, James Fennessey and Robert Young, insolvency practitioners with leading accountancy firm Azets, have been appointed joint administrators of MHA Auchlochan, the owner and operator of the Auchlochan Garden Village retirement complex located near Lesmahagow in Lanarkshire, Scotland.
Auchlochan Garden Village is a residential retirement complex offering accommodation ranging from self-contained studios, flats and bungalows through to full-service care homes. MHA Auchlochan acquired Auchlochan Garden Village in 2009.
Auchlochan sits in 50 acres of grounds and consists of 235 properties ranging from studio flats through to 3-bed bungalows. 55 of the flats and bungalows are vacant. Additionally, the company operates the Lower Johnshill care home, located within the Garden Village, and Bankhouse care home located within neighbouring village, Lesmahagow. There are 242 residents living in the flats and bungalows, and 118 residents living in the two care homes.
The facilities at the Garden Village include restaurants and cafe, lounges, guest facilities, garden, woodland, lake, community centre, hobby and activities rooms, hairdressing salon, laundry and chaplaincy. The entire site is accessible by wheelchair and a village bus runs daily to local shops or further afield for excursions.
Auchlochan Garden Village has been loss-making since it was acquired by MHA Auchlochan in 2009. MHA Auchlochan’s parent association, Methodist Homes, has provided significant financial support but losses have continued to accrue due to uneconomic service charges, staff and maintenance costs and low occupancy levels.
The joint administrators will continue to operate Auchlochan Garden Village and the care homes as normal and will be appointing property agents to market the assets for sale. A specialist interim care home management business, Healthcare Management Solutions Limited, has been appointed to oversee day to day operations and minimise the impact on residents, families, staff and suppliers. There are 216 full and part-time staff across the three sites and there are no redundancies.
MHA Chief Executive Sam Monaghan said: “MHA took over Auchlochan Garden Village in 2009 to prevent it from going into administration. However, the operating model for Auchlochan means it has a range of complex legal, operating and funding issues across the village, which MHA has been unable to resolve despite investing considerable resources over the past 14 years. As a charity, we regret that we cannot continue to do this.
“This is not a decision we have taken lightly and to support the continuation of services during the process of administration, Auchlochan will be able to draw on a contingency fund of £5 million from MHA. This will provide the best opportunity for new operators to be found, which includes the potential for leaseholders to set up their own management company.
“The changes in Scotland also include MHA withdrawing from our three smaller retirement living schemes**, with a view to selling these to alternative providers. The schemes would be difficult to support without the larger infrastructure which Auchlochan gives us in Scotland. Together, these changes mean that MHA will no longer have any services in Scotland.”
Blair Milne, Restructuring partner with Azets and joint administrator added: “Auchlochan Garden Village has been experiencing significant losses since the development was acquired by MHA Auchlochan. Despite the best efforts of the directors, and extensive financial support from Methodist Homes, a viable turnaround could not be achieved outside of an administration process.
“Due to the scale and complexity of the development it will take time to develop a strategy for the administration. In the meantime, it will remain ‘business as usual’ and we will work closely with the Care Inspectorate, South Lanarkshire Health and Social Care Partnership and specialist agencies to support residents and their families during the process. We will also be offering the development for sale, either in whole or in part and would encourage any interested parties to contact the Glasgow office of Azets as soon as possible.”