Mental health hospital owed £2m to staff and creditors when it shut

Milestones Hospital in Catfield made 47 staff redundant when it closed its doors in February, after health inspectors barred it from taking new patients amid a string of safety concerns.

It has now gone into liquidation, owing just under £2.1m to 56 creditors including employees, NHS trusts, healthcare and nursing firms, and the taxman.

In a recent filing to Companies House the firm estimated its only significant asset - the land and property - will raise around £1.2m.

But those funds will be spent repaying a £1m loan from NatWest bank, and £200,000 provided to the business in March 2020 by Sara Cator, wife of majority shareholder Henry Cator OBE, a prominent Norfolk landowner.

Sara and Henry Cator, pictured at the King's Lynn festival service in 2012. She loaned his business, which ran Milestones mental health Hospital in Catfield, £200,000 and will be repaid before other creditors including nursing staff and NHS trusts (Image: Archant)

That money was a loan for refurbishing the building, Mr Cator said. Under the conditions of the loan, Mrs Cator’s £200,000 will be returned to her before debts to other creditors are considered. There is no suggestion of any wrongdoing.

Mr Cator, 65, is a former Deputy Lieutenant of Norfolk and current High Steward of Great Yarmouth whose family, distant cousins to the Queen, has owned and managed swathes of the county for more than 200 years.

He owns 60 per cent of The Atarrah Project Ltd, the registered name of the business which ran the hospital.

Milestones Hospital in Catfield was closed in February 2021 after a CQC inspection found it did not deploy enough staff to manage patient care (Image: Sanderson Weatherall)

He said: "It is very sad the business was forced to close following a failure by the management."

He added that there was "nothing shareholders could do" to address the procedures in place at the hospital, which he said were the responsibility of the management and staff.

Mr Cator said it was "deeply regrettable" that shareholders and many others had lost out.

The business’s other creditors include former nursing staff, who are owed around £139,700. Only £13,160 of that is ringfenced to be repaid by the liquidator under “preferred” terms.

The remaining staff bill of just over £125,000 will be picked up by a taxpayer-funded scheme, the Redundancy Payment Service (RPS), the liquidator said.

The RPS will bill the liquidator, McTear Williams & Wood, but is unlikely to be repaid because - unless the sale of the property generates substantially more revenue than currently estimated - there will be no money left once NatWest and Mrs Cator have been repaid.

Robert Chingwalu, owner of East Point Care Ltd in Wymondham, which provided nursing staff to the company, is owed nearly £80,000. He said the debt had caused “significant cashflow headaches”.

Mr Chingwalu said: “We provided quality nurses and nursing assistants, and we have paid them - so why haven’t Milestones paid us?"

As part of the liquidation the Milestones Hospital property is being listed for sale by estate agents Sanderson Weatherall (Image: Sanderson Weatherall)

Other creditors unlikely to be repaid include HMRC, which is expected to receive only around £40,000 of £220,000 taxes owed, Norwich City Council, and local NHS trusts, owed a combined £10,000.

Mr Cator and his business partner George Yossif are also set to lose a combined £117,000 they loaned the business, and another Cator family member is likely to lose £100,000.

Jo Watts, joint liquidator, said: “The property is being marketed at a guide price of £1.9 million on the advice of Sanderson Weatherall and is therefore expected to realise far more than the estimate in the directors' statement of affairs.”

Milestones is one of several private mental health hospitals in Norfolk which have closed in recent years amid fears for patients’ safety.

The private hospital for female mental health patients was used by the region’s NHS trusts which spent £1.3m placing patients there in 2020.

But a Care Quality Commission (CQC) visit in January found the firm did not deploy enough staff to manage the risk to patients - although it praised the staff for being caring.

Concerns were first raised by the CQC in March 2020 when they downgraded the hospital from “good” to “requires improvement” - the second lowest rating.

It remained open admitting new patients until February 2021, when the CQC found problems including possible ligature anchor points in wards, and ordered patients moved to other facilities.