SOUTHERN CROSS has been forced to call an AGM after its net assets fell to less than half of its share capital, a development that is legislated for under the Companies Act.
Section 656 forces directors to call a meeting in the case of “serious loss of capital”; last week saw the care home provider slash its rent payments by 30% under the looming threat of insolvency, and The Guardian reports the emergency meeting will be held on 12 July.
One expert said the company’s accounts indicate it may have become insolvent as early as last September, suggesting the parent company has made a significant loss in recent months.
The business was signed off as a going concern by auditor PwC last year, but the firm has since warned of “significant doubt” over its ability to continue operating under current conditions.
Before the reduced-rent deal was struck, PwC said: “In the event that the group does not reach agreements with its landlords and lenders, and no alternative finance is available, the group is unlikely to be able to trade.”
Southern Cross has been hit by higher costs, fewer admissions and cutbacks in government spending, putting the future its 750 care homes and 31,000 residents in jeopardy.
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