NRMC officially out of bankruptcy
Published 12:00 am Friday, December 18, 2009
NATCHEZ — Less than a year after it filed for Chapter 9 bankruptcy Natchez Regional Medical Center is on solid financial ground and officially out of bankruptcy.
“We are out of bankruptcy,” hospital board attorney Walter Brown said. “The court has approved a plan, and the creditors have accepted it.”
Natchez Regional Administrator Bruce Buchanan said the hospital’s plan was submitted for evaluation and scrutiny in October and shows a payment plan in which all unsecured creditors with balances of $5,000 or less will be fully paid off in January.
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Buchanan said the sum of these payments equates to $146,395.
Creditors who are owed more than $5,000 have agreed to the hospital’s plan to begin monthly interest payments starting in Feb. 1, 2009.
By Oct. 1, the hospital will begin its equal payments to creditors for a 24-month period.
By Sept. 30, 2012, creditors will have received approximately $3.5 million — including interest.
One of the reasons Board of Trustees Chairman Dan Bland gives for the success and timely nature of the bankruptcy process is bankruptcy lawyer and council Eileen Shaffer’s efficiency.
Shaffer was given the charge to work with the hospital’s fiscal predicament in late 2008.
“(The bankruptcy has been) a difficult thing, and it took a long time at first, but when we handed it off to Eileen, it took off.”
Shaffer said she was surprised with the 10-month-long bankruptcy process.
“This whole bankruptcy process was in record time,” Shaffer said, often it can take two years.
Regional filed for Chapter 9 bankruptcy last February in order to restructure debt.
Chapter 9 is a form of Chapter 11 bankruptcy available to public entities.
It comes with fewer restrictions than a Chapter 11.
After experiencing what the hospital calls “negligence, breach of fiduciary duties, fraud and other wrongful acts and omissions” from its management company during 2006 and 2007, the hospital opted to file for a Chapter 9.
Hospital officials said at the time that NRMC was not actually bankrupt.
NRMC sued its former management company —Quorum Health Resources — last week for $46 million in damages.
Since 2008, the hospital has worked with Healthcare Management Partners, LLC and has formulated a payment plan Shaffer said creditors had little objection to.
“There were only two (objections) regarding the amount of their claim that will be declared later,” Shaffer said. “I don’t remember ever seeing a case this size that didn’t have many objections.”
Bland said the acquiescence of the creditors should be seen as a compliment to everyone involved in bringing the bankruptcy to a close.
Buchanan said he believes creditors were receptive to the hospital’s payment plan offer because many of the businesses are familiar with NRMC.
“Many of the unsecured creditors are business owners who live and work here in Adams County.
“That’s why it was important to everyone, starting with the board of trustees, that we do everything within our power to make this community whole,” Buchanan said.
Buchanan said the time between the January and October payments is a crucial time of recovery for the hospital’s fiscal situation.
“The reason we deferred paying back the principal until Oct. 1 was to give the hospital a number of months to build up some cash reserves on their balance sheet to protect the financial viability of the hospital going forward, which will better allow it to pay back the creditors in full,” Buchanan said.
“And that was part of our negotiation with the creditor’s committee,” Buchanan said. “They recognized that they need a financially viable hospital to be fully repaid.”
Buchanan and Brown both said they thought another selling point of Natchez Regional’s plan was the 100 percent reimbursement creditors were offered.
Bland said while the bankruptcy was necessary to save the hospital, he was proud to have the team he did working to solve the problem.
“It’s been a great teamwork effort,” Bland said.