Care and Social Services Inspectorate Wales (CSSIW) says that staff at Hafan Tywi care home weren't paid at the end of last month - but praised them for continuing to provide care for residents.
The watchdog says there was no guarantee staff would be paid properly, so it wasn't "sustainable" for the home to stay open.
The urgent closure of Hafan Twyi was triggered by a number of concerns over the financial viability of the home, which reached a crisis point when staff were not paid at the end of March. In these circumstances CSSIW had to take legal advice and legal action on 5 April resulting in the closure of the home, to ensure the service users could be properly cared for. There were no tenable management arrangements in place locally and nobody to be properly accountable for the continued safety and welfare of service users.
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