NATCHEZ — By the end of the day, Natchez Regional Medical Center will be in bankruptcy — but it won’t be due to a lack of cash.

Today’s filing is part of a plan put in place by hospital CEO Scott Phillips in April.

Phillips said the hospital is not bankrupt, but instead is using the benefits of chapter 9 bankruptcy to financially restructure the hospital.

“It is very important that the bankruptcy filing is looked upon as a technicality,” Phillips said in a notice to hospital employees distributed Thursday. “The hospital is well staffed and supplied and has the ability to provide outstanding healthcare services to the community.”

Once in bankruptcy, the hospital will have several options, only afforded after the filing, that will benefit the hospital.

First, the hospital will have the option to essentially put off payments on debts for 45 days.

Phillips said that will allow the hospital time to build cash reserves.

And that cash will come in handy should the hospital’s pending sale falter and the hospital be taken off the market, Phillips said.

Bankruptcy will also give the hospital the ability to renegotiate or cancel any costly or unfavorable contracts it’s still bound by.

“This is a good thing for the hospital,” Phillips said.

One contract the hospital will move to terminate is its management contract with Quorum Health Resources.

QHR was managing the hospital during the time that the hospital became financially unstable.

And even while the hospital will technically be bankrupt, their bankruptcy plan outlines how the facility will pay approximately $3.5 million in outstanding debts.

Those owed money will be paid back in full.

Phillips said the hospital sent out close to 150 checks on Tuesday for every account they owed less than $5,000 on, so that those accounts would not be brought into the bankruptcy process.

Phillips said the hospital’s largest outstanding debt belongs to Fordice Construction.

Phillips said the hospital still owes the company approximately $300,000 for renovations to the medical office building.

Fordice, and others owed by the hospital, will be paid back with interest, Phillips said.

Hospital attorney Walter Brown said while it may appear the hospital is misusing the bankruptcy process for its own benefit, the plan was approved by the legislature in March.

“If they had not approved the plan we wouldn’t have been able to get this far,” Brown said.

Additionally, Brown said chapter 9 is specifically used for restructuring municipal holdings, such as the hospital.

And while the hospital is acting legally and within the spirit of chapter 9, it’s uncommon.

Brown said NRMC is one of only a handful of facilities to use bankruptcy while not bankrupt as a means to restructure.

The ultimate goal of the bankruptcy is to provide a clean slate for the hospital’s potential buyer.

Phillips said while the economic downturn has slowed the hospital’s sale, he still feels confident the sale process will move forward.