A major provider of care for the elderly has been accused by the Government regulator of misleading local authorities and undermining an official warning that it is at risk of imminent collapse.

The Care Quality Commission told Allied Healthcare it had failed to provide the assurance of its financial security which it claimed in a letter sent to councils.

It followed a warning this week that the company, one of the biggest providers of care services in the UK, is likely to go bust at the end of this month because it has not lined up a new lender to support its business.

The company today declined to comment on whether it had signed a deal for continued financing, citing commercial confidentiality, but said its current lender had expressed 'willingness' to continue providing a service until January.

Newly-appointed Allied Healthcare chief executive Narinder Singh wrote to councils which contract the company to provide care services on Tuesday saying he was 'surprised and disappointed' by the CQC's intervention which was 'premature and unwarranted'.

He told the councils he wanted 'to reassure you in absolute terms that we remain able to deliver safe continuity of care across our operations'.

Mr Singh said talks were proceeding with potential lenders and an offer of financing was 'on the table'.

He accused the CQC of ignoring his reassurance 'in spite of the robust evidence we have provided'.

However, a letter seen by LocalGov from CQC chief inspector of adult care Andrea Sutcliffe responding to Mr Singh says if he had provided the assurances he claimed it would not have been necessary to issue the 'Section 6' warning over the company's future.

She said the company had failed to meet several deadlines for providing information on new lending facilities after the end of November.

The company was already 'significantly adrift' on the key performance indicators for the number of hours of care it was paid to provide and this was getting worse.

It had only a 'very limited track record' of winning new tenders following a debt restructuring deal struck earlier this year and had not been able to confirm an agreement with a new lender.

Ms Sutcliffe said it was not 'ordinary' as claimed to take refinancing of lending facilities to expiry date and pointed out that having an offer of financing 'on the table' was not binding.

She concludes: 'Given the precariousness of your situation I am confident that our decision regarding the issue and timing of the Stage 6 notification was the right one to allow local authorities sufficient time to prepare for the likelihood of service disruption and ensure continuity of care for people.'