Accounts reveal £6m debts at troubled care group Choices

Pressures on local government funding for care services are understood to have been a major factor in causing cash flow problems at the Livingston-based company, which had expanded rapidly both through organic growth and acquisition in the past 15 years.

The company, one of the largest care providers of its kind in the UK, employing 1,400 staff and looking after 800 clients, is continuing to trade while administrators Zolfo Cooper seek buyers for remaining parts of the group.

The latest accounts for the group's holding company showed it made pre-tax losses of 1.05m in 2009 on turnover of 18.4m. Bank loans were 6.8m, secured over the group's properties, and after the year-end revised facilities had been agreed with Barclays to "provide increased working capital as the company continues to grow". A further 600,000 had been invested in the company by Baird Capital, the private equity company which had backed a management buyout at the firm in 2006.

The accounts show that its financing arrangements, including preferences shares owned by Baird, were due for renewal in September 2011.

Choices was bought from its founders in a 20m management buyout in March 2006 when the turnover was around 12m and it was providing care for around 130 users. The buy-out was backed by Barclays and a 10m equity investment from Baird. Three years ago the business significantly expanded through the acquisition of Clydebank-based based Domiciliary Care (Glasgow), which employed 350 people providing services to clients with disabilities and mental health problems in a deal worth around 1.5m.

In May this year the group announced that Andy Etherington had been recruited as the group's new chief executive but according to Companies House filings he had not yet been appointed a director of the company. Zolfo Cooper said there had been significant interest from potential purchasers.