Four Seasons, Britain's second-biggest care homes operator, has struck a last-ditch deal with its major creditor that staves off the immediate threat of administration.
The group, owned by Guy Hands' private equity vehicle Terra Firma, is struggling under £525 million of debt and faced a critical interest payment on Friday.
Four Seasons operates nine care homes in Lancashire, including Preston Glades Care Home in Ribbleton; Priory Park in Penwortham; Aarondale in Coppull; Euxton Park near Chorley and Morecambe Bay Care Home in Morecambe.
Four Seasons' board has been racing against time to thrash out a so-called "standstill" agreement with its principal creditor, American hedge fund H/2 Capital Partners.
On Thursday, the care giant confirmed a deal with H/2 has been reached.
"This standstill ensures continuity of care for Four Seasons' residents and enhances operational stability for employees and all stakeholders," the companies said in a statement.
It gives the firm breathing space to agree a more long-term restructuring, with H/2 set to take full control of the care homes operator.
"The primary objective of a restructuring plan is to create a sustainable, long-term capital structure that best-serves residents, patients and employees," they added.
However, the details of a long-term restructure still needs to be agreed upon, with a fresh deadline of April 2 being set.
Until it is signed off, the future of 17,000 elderly residents across 343 homes is still in doubt.
Had Four Seasons fallen into administration on Friday, it would have been the biggest care homes failure since Southern Cross in 2011.
Four Seasons chairman Robbie Barr said: "The board and I look forward to working closely with H/2 and their advisers on delivering a restructuring that will provide the right capital structure for the company's long-term needs."
H/2 boss Spencer Haber described the standstill as the "first step" toward a successful restructuring to secure the long-term future of the "vitally important care provider".
The threat of administration came after a spat between Terra Firma and H/2 over the ownership of 24 homes stymied talks.
H/2 has said it stands ready to take control of the care homes group, with Margaret Ford, former chairwoman of rival Barchester, at the helm.
Terra Firma bought Four Seasons for £825 million in 2012 and stomached a £450 million writedown on its investment two years ago.
Four Seasons has seen its financial performance deteriorate in recent years.
It has been stung by a cut in local authority fees, rising costs and the introduction of the national living wage, and the group has continuously warned over its long-term financial stability.