Further, the board wants the letter signed by the Lingle administration, key lawmakers and the area's representatives, said Eric Beaver, hospital board president.

The board also wants the release of $500,000 in emergency funding — as promised by the state — by Dec. 20, he said.

"If the memorandum of understanding gets executed and those two conditions are met, we're comfortable going through Chapter 11," Beaver said.

Lawmakers were pleased that the board agreed to suspend the bankruptcy filing.

"That's significant progress," said Sen. Clayton Hee. "That suggests that they are as interested in a healthcare facility at Kahuku as we are. I'm sure we'll do the best we can, and I expect we'll get it done."

"We're very comfortable as a board with these next couple of steps," Beaver said. "We all appreciate that the government is at the table and willing to do what they can to help keep this basic service in the community."

But if any of the conditions is not met, the board reserves the right to move forward with a Chapter 7 bankruptcy filing, he said.

A Chapter 7 filing would shut down the hospital and disburse its assets to creditors, who are owed some $3.5 million. In the process the hospital would lose its license, Certificate of Need and Critical Access Hospital designation.

Chapter 11 would preserve those necessary licenses and designations, reorganize the hospital, settle debts and allow it to continue operations, though probably in a different form.

The vote is a small step in a process that could take six to eight months. But it's a step lawmakers had asked the board to take so that the Legislature can pass a bill directing the HHSC to include Kahuku Hospital in its safety net, said Hee, D-23rd (Kane'ohe, Kahuku).

Hee and state Reps. Michael Magaoay, D-46th (Kahuku, North Shore, Schofield) and Colleen Meyer, R-47th (Ha'iku, Kahalu'u, La'ie) have been working with the hospital and the state Department of Health to try to save the hospital or preserve some of its services.

Kahuku is the only hospital within an hour's drive of the next nearest hospitals in Kailua and Wahiawa, and its closure would leave the entire North Shore vulnerable during an emergency, especially when roads are closed by accidents or flooding which happens frequently from Waiahole to Hale'iwa.

But the hospital has been losing money for six years. The board has been unable to stop the hemorrhaging and says the hospital cannot continue to operate on its own.

Beaver said he also appreciates the support from the staff and the community, which held a rally and collected more than 3,000 signatures in a petition asking the board to rescind its vote on the Chapter 7 and pursue other options. Beaver said the petition was a factor in the decision.

Those people will be needed at the Legislature once the bill for the acquisition begins going through the legislative process, he said.

"We hope ... they will come to the Legislature to make their voices heard," Beaver said. "We need that kind of support."

Lorrie Callaway, director of nursing at Kahuku, said the process has only begun, and there's a long way to go before the hospital is preserved.

"People still need to keep vigilant and supportive," Callaway said. "We have to keep the pressure on the legislators to move this thing through."

Reach Eloise Aguiar at eaguiar@honoluluadvertiser.com.