NATCHEZ — Saying he didn’t see another option in light of Natchez Regional Medical Center’s insolvency, Judge Neil Olack said Monday evening he would approve the sale of the county-owned hospital.

Olack — the chief U.S. bankruptcy judge for the Southern District of Mississippi and the justice who has been overseeing NRMC’s bankruptcy case — said he should begin reviewing the official order by midday and have it signed in time for the sale to close at 11:59 p.m. tonight.

With the close of the sale, ownership of the hospital will pass from Adams County to Community Health Systems, the national health care giant that is purchasing the financially beleaguered county-owned hospital for $10 million.

The purchase agreement also requires CHS to pre-pay $8 million in ad valorem taxes.

“Based on the evidence presented, we don’t really have a choice,” Olack said. “If the hospital closes, there isn’t any (financial) waterfall (to pay creditors).”

Olack’s comments were based on testimony by Healthcare Management Partners Chief Executive Officer Scott Phillips and certified public accountant Scott Christian with the Gillon Group.

Christian testified he was called in at the 11th hour — the second week of September — to help make sense of the hospital’s books and get correct numbers for a settlement.

“Without the pre-paid taxes and cash (from the sale), there is virtually nothing to pay the creditors,” Christian said.

In addition to tentatively approving the sale, Olack likewise gave his verbal blessing to a settlement in the bankruptcy plan between Adams County and the hospital’s unsecured creditors.

In the settlement, Adams County and the unsecured creditors will in essence split the back end of the so-called financial waterfall, said Douglas Draper, the attorney for the committee representing unsecured creditors.

The settlement is tied in particular to the hospital’s final months of accounts receivable, the escrow account NRMC is being required to set aside for any potential liabilities that may surface after the sale and the recovery of funds tied to lawsuits the hospital estate may pursue.

Under the settlement, the first $1 million in those funds will be directed to Adams County, the second $1 million will be directed to the unsecured creditors and everything that follows will be split, Draper said.

Adams County has agreed to finance the sale with a $3 million loan to cover costs at closing that the sale package with CHS won’t cover. The settlement is a compromise that softens the county’s collection priority position as an end-stage financer in favor of allowing the unsecured creditors some collections.

“Adams County has agreed to assume the risk with the unsecured creditors because we are essentially the ones who funded this (hospital) for so long,” Draper said.

“We had to make sure everyone got something and that this planned reorganization wasn’t covered on the backs of the creditors.”

Much of the eight hours of testimony Monday centered on the appropriateness of legal and professional fees associated with the case, including nearly $1.25 million associated with NRMC’s legal team.

Ultimately, Olack found the fees to meet the test of reasonableness, but said they were much higher than might have been necessary because of the hospital’s poor bookkeeping.

“At the beginning of the case, would I have said the debtor would bill $1.25 million from fees? I never imagined,” Olack said. “Am I enthusiastic about taking $1.25 million for this hospital? No. Given the totality of the circumstances, I feel we don’t have a choice.”

Olack said the case has been incredibly expensive in part because numbers from the hospital have been unreliable and court filings needed to be reworked several times.

“You have to keep doing the same work over and over because the information is inaccurate, and every time we have to do this all of these (legal) meters are here running,” he said.

Most of the early testimony was a recapitulation of the narrative of the process of selling the hospital, and included testimony from the hospital board chairman, the Rev. LeRoy White, Adams County Board of Supervisors President Darryl Grennell and Phillips.

Kenneth King, vice president of acquisitions for CHS, said the company has agreed to retain all but five hospital employees.

NRMC filed for bankruptcy in March, the second time in five years.

One of the fees Olack approved were $29,985.33 in fees owed to bond holders from the hospital’s 2009 bankruptcy. Because the hospital was not sold at that time and has never defaulted on its bond debts, the bondholders did not have a way to collect legal fees associated with the previous bankruptcy.

The sale will pay off more than $13 million in bonds, though the 5-mill standby tax backing the bonds will be transferred as collateral to cover the county’s $3 million loan.

CHS already owns Natchez Community Hospital.