The draft plan for the disbursement of debts filed with the court does not specify how much the potential escrow might be, only noting that the successful purchaser will negotiate it with the county. Though county and hospital officials have said it is unlikely, another buyer could outbid CHS at auction. Any final agreement is subject to the approval of the court.

“The escrow is designed to protect the buyer from having to pay for events that are unknown, that they had no control over,” he said. “It is not unfair or unreasonable that one would ask for it.”

CHS, the county, the hospital and the bankruptcy court have approved the agreement, Phillips said.

“The amount (of escrow) is not in dispute at all in my knowledge,” he said.

“There is not a plan (to change the amount) at this point. I think that kind of discussion would be premature, even.”

Phillips said asking for a reduction in escrow would be akin to having a seller crash a car on the way delivering it to a buyer and demanding the buyer pay for repairs.

Phillips said he believes the cash flow issue will be worked out in the next week.

“The problem now is putting enough liquidity into the hospital to get it to the closing,” he said. “Once we close, there appears to be pretty much sufficient assets to pay people.”

“The hospital is taking some aggressive steps that four months ago could have been less aggressive (if they had been taken at that time).”

NRMC recently announced steep pay cuts to all employees making more than $9 an hour.

Slover said one of the goals of the ongoing discussions is that taxes will not go up.

CHS Vice President of Acquisitions Kenneth King, who in the emails obtained by The Democrat asked local hospital representatives not to discuss CHS’ plans with the newspaper, said Friday he could not make public disclosures about the sale closing process.

“I am involved in the transaction, but I don’t have the authorization to talk to you about it,” he said.

Attorney Slate Dabney, the legal counsel for the committee representing the hospital’s unsecured creditors in the bankruptcy, said he is looking forward to Aug. 26, when the court will have a hearing on a required disclosure statement.

“(The cash flow issue) is a source of concern, though I don’t want to say much because we are still trying to get information,” Dabney said. “We are not clear enough as to the financial numbers at the moment to comment.”

Even as the cash flow discussions are ongoing, the county is advertising the Sept. 11 auction date for the hospital.

As the stalking horse bidder, CHS has agreed to put forward an initial bid package of $18 million. The package is composed of $10 million in cash and $8 million in pre-paid ad valorem taxes to Adams County and the City of Natchez.

In the court-approved bidding process, a qualified bidder would have to outbid CHS by at least $1 million, and every subsequent bid would have to outbid the previous bid by $100,000.

The $1 million initial overbid requirement is to cover the cost of the stalking horse bidder’s due diligence costs. In stalking horse agreements, the stalking horse bidder has a built-in financial incentive in case they are outbid because of the presumed risk they are taking on by being the stalking horse.

The court’s approved stalking-horse fee for CHS is $500,000.

During the advertisement period, county residents have the option of filing a petition asking to take the sale to a voter referendum for approval. The petition would require 1,500 signatures to take the matter to a vote. No petition has been filed with the circuit clerk’s office.

If a successful petition is not filed, the hospital can go to sale without further objection.

NRMC opened in 1960 as Jefferson Davis Memorial Hospital. Its $2.4 million construction was underwritten by an $800,000 local contribution and state and federal funds.

It has been financially independent since 1974 and does not receive tax support, but is backed by a 5-mill standby tax that the Mississippi Development Bank required the hospital to get in 2006 when it asked for the MDB to reissue its revenue bond.

The hospital board of trustees announced in February its intention to declare bankruptcy, citing at the time a $3 million deficit between financial assets and liabilities.