Kahuku Hospital files for Chapter 11
By Eloise Aguiar
Advertiser Windward Writer
By Eloise Aguiar
Financially troubled Kahuku Hospital has taken another step toward keeping its doors open, filing for Chapter 11 bankruptcy under a prearranged plan to save the Windward medical facility.
The Feb. 23 filing is part of an agreement between the hospital and the state to appropriate emergency funding and place hospital operations under state control.
"The purpose of the Chapter 11 proceeding is to facilitate a transfer of the hospital, in one form or another, to the state hospital system," said Don Jeffrey Gelber, Kahuku Hospital bankruptcy attorney. "Whether it will be an acquisition or an affiliation has not been determined."
The 25-bed hospital has lost millions of dollars over the past six years, and its closure would have shuttered the only emergency room on the North Shore. Since mid-November, when the board announced it was being forced to close the facility, the state and legislators have worked to see how they could avoid a shutdown.
The hospital hopes to shed about $3.5 million of debt through Chapter 11 bankruptcy and make it more attractive for the hospital to be transferred to Hawai'i Health Systems, operator of 12 community hospitals for the state.
Under the December agreement with the state, the hospital would receive $500,000 immediately, and legislators were to introduce a bill for an additional $950,000 in emergency funding, as well as a bill to outline the acquisition of the facility.
Gelber said the hospital received the $500,000 and that both bills are pending.
Debt listed in the bankruptcy papers includes $343,000 owed to Hawaiian Electric Co. Inc., $173,000 to The Queen's Medical Center, $140,000 to Clinical Laboratory and $128,000 to Continental Pacific for lease rent.
The bankruptcy filing is the first step in a procedure that could last months, but Gelber said the state needs to approve the additional $950,000 soon to keep the hospital solvent.
"We're hoping the Legislature moves expeditiously," he said.
Reach Eloise Aguiar at email@example.com.