Judge sends NRMC plan to creditors; Confirmation hearing Sept. 29 in Natchez
JACKSON — A federal bankruptcy judge signed Friday an order that will send Natchez Regional Medical Center’s plan to pay its debts to its creditors for approval.
The order comes with a 28-day period during which creditors can object to the plan. The confirmation hearing for the plan will be 9 a.m. Sept. 29 in Natchez.
“There is still some time for objections to be filed to the plan, but we don’t expect anyone to object to it,” said Scott Slover, attorney for the Adams County Board of Supervisors.
“Once the plan is confirmed, the bankruptcy estate can fulfill the plan, which allows the county to sell the hospital, pay off the bonds and use the proceeds to pay off everyone else as according to the plan.”
Though the hospital operates as an independent body, it is county-owned and must be sold through the board of supervisors.
Slover said the county does not expect any objections to the plan because it was developed with the input of the affected parties, including NRMC’s unsecured creditors, the hospital’s probable buyer, Community Health Systems and NRMC’s bond company.
“All of these groups have been working together to make a plan that everyone is comfortable with,” Slover said. “Obviously, bankruptcy isn’t an ideal situation, but this is what everyone believes is to be what is best for everybody in this situation.”
Walter Brown, the hospital’s attorney, said the plan was a consensual one from all of the parties, including the committee representing the unsecured creditors.
“The unsecured creditors committee sent out a letter with the materials (associated with the order) which discusses the case and goes through the various aspects of the risks and advantages, and in the last paragraph recommends approval of the plan,” Brown said.
“This was a frenzied week, putting it all together and negotiating terms as to the manner of distribution with the unsecured creditors, but our bankruptcy attorneys did a great job.”
The proposed plan includes a $3.5 million loan that will be used to pay off the hospital’s line of credit with United Mississippi Bank and other costs associated with the bankruptcy. The loan will be collateralized with the anticipated accounts receivable for the hospital’s final months of operations and a 5-mill standby tax that will be activated in the event that the accounts receivable does not cover the loan.
The reported accounts receivable expected to be available following the sale is approximately $5 million.
Slover said Thursday the $4 million in escrow the hospital will be required to hold for two years to cover any potential liabilities following the sale will also be available to pay off the loan.
The escrow will also be used to pay creditors when it is released.
The hospital’s approximately $13.96 million in bonds will be paid off in the sale, which is set to close Sept. 30.
CHS has stepped forward as a stalking horse bidder with an offer of $18 million for the hospital when it goes to auction Sept. 11.
If no other bidder tops CHS, the sale can move forward without delay. Hospital officials have said they do not expect a second bidder.
CHS owns and operates the nearby Natchez Community Hospital.