NATCHEZ —Adams County Supervisors were all “terribly upset” at the news Natchez Regional Medical Center would be filing bankruptcy, Supervisors’ President Darryl Grennell said.

The board of supervisors met with NRMC’s administration and trustees Tuesday morning, at which time they were told of the county-owned hospital’s plan to file Chapter 9 bankruptcy. The plan was publicly announced Tuesday afternoon.

NRMC reportedly has a $3 million disparity between its financial liabilities and its assets.

“I was very surprised,” Grennell said. “I didn’t have any idea it was in that bad a situation financially. I knew they had indicated to us that they were using settlement money to handle some things at the hospital, but I had no idea.

“When we were presented with this decision by the board of trustees that they needed to file Chapter 9, we were all terribly upset when we received that information.”

Grennell’s reference to settlement money was an allusion to the settlement of the hospital’s $40 million lawsuit against its former management company in late 2012. Though the matter was sealed in federal court at the request of the parties, sources close to the matter said the settlement was in the amount of $15 million.

Supervisor David Carter said he expressed consternation at Tuesday’s meeting because he and other supervisors had previously requested information about the hospital’s financial status as it relates to the ongoing effort to sell NRMC, but did not receive a reply before the bankruptcy decision was made.

“I feel like the people interested in buying the hospital know more about it than we do, and I don’t think that’s right,” Carter said.

In an email dated Feb. 3 obtained by The Natchez Democrat, the hospital’s attorney, Walter Brown, told the supervisors’ attorney Scott Slover he had received the request.

“Please note that (Chief Financial Officer Charles Mock) should at this time be working full time to gather the information and documents required for the filing of the petition in bankruptcy,” the email reads. “As an experienced attorney, you know that this is a task of great proportions, and as you know we have a very small accounting/finance division…I mention this so that you can understand the task before our hospital. The documents and information Charles is now working on, will in my opinion more than suffice for what you have requested. I estimate it will take Charles a full two weeks to meet that responsibility, maybe longer.”

Bankruptcy court filings are public record.

Grennell said the supervisors took no formal action on the bankruptcy because the trustees can file Chapter 9 bankruptcy without formal action from the county government.

“We all agreed with what we were presented with (Tuesday) morning that there was a need to file Chapter 9 to keep the doors open,” Grennell said. “We want to keep the doors open until we are able to make a successful sale of the hospital.”

During NRMC’s 2009 bankruptcy, the board of supervisors was in a similar position, Grennell said, receiving updates about the process as it moved along without being directly involved.

“All authority, based on the state statute, goes to the board of trustees, so in a sense we are powerless as it relates to the filing of Chapter 9,” he said. “All we can do is basically be supportive and hope things go through as it relates to the sale of the hospital.”

Grennell said he does not think the bankruptcy filing will affect the county’s contractual relationship with Healthcare Management Partners, the company hired to market the hospital for sale.

HMP led a similar effort to sell the hospital during its previous bankruptcy, though the effort was unsuccessful.

“(HMP Chief Executive Officer) Scott Phillips will hopefully help make it a successful sale,” Grennell said. “We are still proceeding as usual with trying to commence the sale of the hospital.”

The legal processes of trying to market the hospital began in June. Brown said Tuesday, even with the bankruptcy notice, NRMC is continuing to negotiate with a potential buyer.

“We commenced this sale last year, and this bankruptcy proves there is a need to sell the county-owned hospital because of the financial difficulties they face,” Grennell said.

“I have always been in favor of having a county-owned hospital, but based on the information provided to me, this community is no longer a two-hospital community.”

Before the bankruptcy process can officially start, the state legislature has to pass and the governor has to sign a bill approving the measure. Rep. Robert Johnson III, D-Natchez, said Wednesday he had received the request for the bill from the hospital and it was being drafted.

When the bill is filed, Johnson will be the primary sponsor, he said.