A US hedge fund could be in line to pocket up to £500 million from the collapse of Four Seasons, Britain's second biggest care homes operator.
Four Seasons, owned by Guy Hands' buyout vehicle Terra Firma, is struggling with £525 million of debt and faces a critical interest payment next week.
Its principal creditor, the American hedge fund H/2 Capital Partners, run by Spencer Haber, will hold sway over the firm's assets if it fails to make the payment and falls into administration.
The Press Association understands that H/2 bought its debt holding in Four Seasons for approximately £256 million, while the enterprise value of the care operator is thought to stand in the region of £700 million.
H/2 has already received debt interest payments of £50 million, meaning that were the hedge fund to sell the group or its debt on, as some industry experts expect, it could profit to the tune of £494 million.
The revelations come alongside a bitter dispute that has broken out between Terra Firma and H/2, with Mr Hands urging the hedge fund to take full control of the group before it goes into administration as part of a debt restructuring.
But H/2 has rejected the terms of the proposal as the pair disagree over the terms of the restructure and over the ownership of 24 homes, which are subject to a court battle.
"Terra Firma calls on H/2 Capital Partners to accept its offer.
"We believe this outcome will deliver much-needed certainty for patients and employees of the Four Seasons group and most importantly achieve the consensual outcome that Terra Firma and H/2 Capital Partners have both set out as their core objective," Terra Firma said on Monday.
In a sign that the disagreement is turning increasingly acrimonious, Terra Firma also accused H/2 of being "unwilling to engage", blocking email addresses and refusing face to face meetings.
A spokeswoman for H/2 said: "We have made three offers to Four Seasons to agree a standstill in the last 60 days and are totally focused on ensuring a transparent, fair and ultimately successful restructuring process for everyone involved."
Residents at Four Seasons, which houses 17,000 elderly residents across 343 homes, will hope that next week's debt payment is at least deferred so that an agreement can be thrashed out.
H/2 has said it stands ready to take control of the care homes group with Margaret Ford, former chair of rival Barchester, set to become chairman.
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 stability.