Sedgemoor, which has more than 65 residential homes and 14 schools providing services for children with behavioural difficulties and complex needs, has confirmed negotiations are taking place.
A spokesman for the company told CYP Now: "Sedgemoor is in advanced negotiations that might lead to a sale of the business, but no other comment is possible at this time."
Local authorities using Sedgemoor residential homes contacted by CYP Now, including Cambridgeshire County Council and Bath & North East Somerset Council, were not aware of a potential sale.
Sedgemoor's last publicly available accounts, dated 31 December 2005, show a loss of £67,574, compared to a profit of £765,404 the year before. The accounts also show Sedgemoor owed creditors more than £12m, due within one year. Of this total, £9.2m was for "other taxes and social security costs" not including corporation tax.
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