News Column

OPINION: Hospital bankruptcy deal smells

August 30, 2014

By Kevin Cooper, The Natchez Democrat, Miss.



Aug. 31--Can anyone believe much that comes from the mouths of those working to sell Natchez Regional Medical Center anymore?

A year ago, as the sales process was getting kicked up, citizens were publicly led to believe the sales process would be wonderfully easy and beneficial.

A professionally produced sales video -- aka propaganda -- was produced suggesting a new hospital would be built and all the flowers in town would immediately bloom year round, or something like that.

The fact is this wonderful plan as it was pitched -- new hospital built, all employees retained, new specialist doctors, etc. -- has turned pretty ugly fast.

At the moment, all of the local hospital bashers who have been screaming, "Sell, sell, sell," for months now may be scratching their heads a bit.

The plan, from their perspective, was to sell the hospital quickly thus freeing the county from its standby tax obligation to cover the hospital's approximately $14 million bond.

Now, however, it appears the hospital's financial death spiral has become so steep that a new standby tax commitment, along with a loan of up to $3.5 million by Adams County will be necessary just to get the hospital sold.

What's worse, even with the complex financial finagling going on to get the hospital sold, the hospital's non-secured creditors may still take a bath before it's all said and done.

Despite lots of talk that Natchez Regional's bankruptcy filing wouldn't result in shortchanging creditors, it appears much of that isn't a certainty anymore.

A committee appointed to represent the non-secured creditors in the bankruptcy put the hospital's financial mess in clear order in a recent letter that effectively urged all the non-secured creditors to simply take the deal being offered. The letter said, in part:

"When the bankruptcy case was first filed, Natchez Regional Medical Center and its advisors told creditors that the Hospital would be sold to Community Health Systems ("CHS") and that the sale would result in 100% payments to the NRMC creditors.

"The suggestion by NRMC and its advisors of a 100% recovery has proven inaccurate. This inaccuracy is due to a variety of factors that include failure of the Hospital to properly manage its business during the bankruptcy, inaccurate financial information and a purchase price that is less than expected."

The committee goes on to say the hospital's inept financial record keeping caused it to inaccurately report its financial projections.

"On Saturday, Aug. 23, 2014, we received the latest financial projections. Based on those projections, the recovery, in approximately two years, to unsecured creditors is around 40 percent. However, this recovery is by no means a certainty and new information continues to be discovered virtually daily."

Last week, the public learned that hospital attorney Walter Brown was paid $123,272.44 the day prior to the hospital's bankruptcy being filed.

While such an last-minute payment to an insider may not be illegal under the Chapter 9 bankruptcy rules, it certainly smells bad, particularly when the rest of the unsecured creditors had no such option and may be stuck waiting up to two years just to see how many pennies they may receive for each dollar earned.

Kevin Cooper is publisher of The Natchez Democrat. He can be reached at 601-445-3539 or kevin.cooper@natchezdemocrat.com.

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(c)2014 The Natchez Democrat (Natchez, Miss.)

Visit The Natchez Democrat (Natchez, Miss.) at www.natchezdemocrat.com

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Source: Natchez Democrat, The (MS)


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