- Investor surprisingly backed out -
- Shortage of skilled staff, increased personnel and energy costs as well as a considerable backlog of refurbishment work on the properties mean that the facility cannot cover its costs -
- Residents, relatives and caregivers called upon to look for another home, operator provides support - If no investor steps in at the last minute, there is a threat of closure of the facility and dismissal of all employees from an insolvency law perspective -
Eisenach, 16.01.2024. After the most promising investor suddenly backed out at the last moment at the end of December 2023, Wilhelm Augusta Soziale Dienste gGmbH, with its administrative headquarters in Eisenach, is on the brink of collapse. Wilhelm Augusta Soziale Dienste operates the Lutherhaus and Vogelshof senior citizens' center, also known as the 'Augustastift', in Schleusingen and had filed for insolvency at the local court in Meiningen at the end of September 2023. "The investor's refusal is a bitter setback for the residents, their relatives, the employees and also for us, which we did not expect," says Tobias Reinhardt, Managing Director of the operator of the facilities.
Intensive search for investors
The provisional insolvency administrator, lawyer Marcello Di Stefano from the law firm DiLigens Rechtsanwälte & Insolvenzverwalter, and the management had previously continued the business operations of the two facilities and immediately sought an investor. It quickly became clear that it would not be possible to continue the two facilities without a buyer who would invest new capital. To this end, the management and the provisional insolvency administrator commissioned an M&A consultant, ABG Consulting-Partner GmbH & Co. KG from Dresden, with the implementation of a structured investor process. Around 100 potential interested parties from the industry were contacted in the fall. After signing a non-disclosure agreement, a total of six interested parties were granted access to the data room.
Cancellation after negotiations at an advanced stage
After other potential investors had declined, the negotiations and talks focused on a promising investor. Talks with this investor were at an advanced stage and the terms had been negotiated. The purchase agreement, which had already been finalized, was due to be signed at the end of December 2023. "It came as a shock to us all when the deal was suddenly rejected shortly before the end of the year. Of course, we are currently doing everything we can to find a solution to continue the business in the short term despite the difficult situation, but if we don't manage to conclude a deal, the facility is threatened with closure, as we simply don't have the financial resources to continue the business," says provisional insolvency administrator Marcello Di Stefano.
Hope to the last
After the previously most promising interested party dropped out, the provisional insolvency administrator and his team immediately made intensive efforts to find other interested parties. At present, there are still two potential takeover candidates, but they have only emerged at a late stage, which is why the remaining time to realize a takeover is extremely short in view of the given economic constraints.
Difficult market situation for retirement and nursing homes
At present, not only the Augustastift senior citizens' center, but all operators of senior citizens' and nursing homes are struggling with extraordinarily difficult market conditions. The blatant shortage of skilled staff as well as increased personnel and energy costs pose major challenges for operators of retirement homes. In this case, the problems are further exacerbated by the need for considerable investment in the buildings. In the Lutherhaus, for example, only one of three floors can currently be occupied, making it impossible to cover costs. If the occupancy rate is too low, the facility quickly slips into the red.
Terminations upon the opening of insolvency proceedings
If no investor is found in the short term and cost-covering business operations are no longer possible, the insolvency administrator will be forced to discontinue the business operations of the two facilities at short notice for reasons of insolvency law. This is expected to be the case immediately after the opening of the proceedings, which will take place on February 1, 2024 by order of the Meinigen Local Court. The consequence would be the termination of all residential and care contracts of the residents as well as the employment contracts of the employees at the next possible termination date. Ultimately, meals on wheels would also have to be discontinued.
Support in the search for a place in a home
"In this worst-case scenario, we have to expect that affected employees will also resign of their own accord and that business operations will come to a standstill until the end of February 2024, as responsible care will not be possible without sufficient staff," says Managing Director Reinhardt. It goes without saying that the home supervisory authority and the management will support the residents in their search for a new place in the home.