Adams County supervisors question figure in hospital bankruptcy plan
Published 12:04 am Wednesday, September 3, 2014
NATCHEZ — A half-million dollar detail in Natchez Regional Medical Center’s amended bankruptcy plan had members of the Adams County Board of Supervisors expressing concern Tuesday.
The plan, filed by attorney Stephen Rosenblatt of Butler Snow, includes a not-to-exceed $3.5 million loan to pay off the county-owned hospital’s end-stage financing.
The plan calls for the loan to be paid off with the accounts receivable due to the hospital for its final months of operation, which will not be fully collected for several months. It also includes an up-to 5-mill standby tax should the accounts receivable not cover the cost of the loan.
But Supervisor Mike Lazarus — followed quickly by all of his colleagues on the board — questioned why the amount included in the plan filed with the court was $3.5 million.
The supervisors all said the amount they had discussed in a planning session had been $3 million.
Slover said Tuesday afternoon he did not know what led to the change or who communicated the $3.5 million number, but even though it was included in the filing the board was not bound to $3.5 million.
The phrasing of the document allows up to that much but does not require it, Slover said.
“The board was just affirming their commitment to $3 million,” he said.
Slover said he could not comment further on the number in the filing without speculating or putting words in Rosenblatt’s mouth.
The plan still has to be approved by the creditors, and a confirmation hearing in which the creditors’ votes for the plan will be tallied, is scheduled for Sept. 29 in Natchez.
The projected recovery for unsecured creditors is no more than 50 percent, even after $4 million in escrow is released in two years.
The plan requires $4 million from the sale proceeds be set aside in case any liabilities arise from the hospital’s final months of operations.
NRMC — which was placed under Chapter 9 bankruptcy protection in late March — is set to go to auction Sept. 11.
The anticipated buyer, Community Health Systems, has already put forward an initial offer of $18 million, a structured deal that includes $10 million in cash and $8 million in pre-paid taxes.
Under the adopted bidding rules approved by the bankruptcy court, any topping bidder would have to offer a total of $19 million to displace CHS. Hospital officials have previously said they do not expect a second bidder to materialize.
CHS already owns the nearby Natchez Community Hospital.