STRICKEN Darlington-based care homes provider Southern Cross is today expected to reach an agreement with landlords, banks and the Government to ensure that its 31,000 residents will still be cared for, even if the company were to fall into administration.

The deal, set to be hammered out at a crunch meeting this afternoon, is designed to allay fears that frail and elderly residents may suffer disruption if the company collapses.

It could also help restore confidence in the company, which runs 752 care homes, in a bid to stem the decline in the number of residents.

The meeting could see Southern Cross thrash out the framework for a deal with its landlords and its banks to ensure its future survival.

It is believed the most likely outcome will be that Southern survives the crisis, but with many landlords withdrawing their homes from the company in coming months and running them independently. This would leave the restructured company with a much smaller number of homes.

One insider said it could take days or even weeks to reach a final agreement but it is hoped progress can be made at today's meeting.

Southern Cross, the UK's largest care home operator, has been struggling under a £202m annual rent burden while its own income falls as public sector customers, such as local authorities, make cutbacks.

It has warned it is in imminent danger of financial collapse and recently announced it would cut its rent payments to its 80 landlords by an average of 30% over the next four months to buy it some breathing space.

The Southern Cross Landlords Committee said earlier this week its members were prepared to throw the stricken company a lifeline by taking significant cuts in rent. But it wants the banks and the taxman to share some of the financial pain.

Southern Crosss main lenders are Barclays and taxpayer-backed Lloyds Banking Group, which are understood to be owed about £50m in total. The taxman is reported to be owed £20m by the company.

The meeting will see negotiations between Southern and its landlords about how much of a rent cut they would be prepared to accept to help ensure the company's long-term survival.

The proposals will also allow landlords to withdraw their care homes from the group to run them themselves or find other users.

The banks are expected to attend the meeting but it is not known whether a representative from HMRC will be present. The Department of Health is understood to be acting as a deal broker.

There could also be an announcement about how many of Southern's homes are returned to landlords to be run as separate companies, but this depends on how much progress is made at the talks.

The company, which employs 44,000 staff, recently revealed plans to cut 3,000 jobs. These include more than 300 nurses, while 1,275 care staff, 700 catering posts, 440 domestic jobs and 238 maintenance roles could also go as part of its business revamp launched 18 months ago.