The territorial government is taking former Yukon Party cabinet minister Peter Jenkins to court to collect on his $308,000-plus debt.

Documents were filed in Yukon Supreme Court Monday demanding the $308,165.24 be repaid and presenting a possibility where Jenkins could lose the Eldorado Hotel in Dawson City if the debt isn't paid off.

Eight days ago, Jenkins resigned from the Yukon Party and his high-profile positions of deputy premier, government house leader, Environment minister and Health and Social Services minister to sit as an independent.

The Klondike MLA cited concerns over his inability to advance issues in Dawson as the reason for his resignation.

However, Premier Dennis Fentie said the move had more to do with Jenkins' delinquent loans.

The premier told reporters Jenkins would have been removed from cabinet any way because the party wouldn't tolerate a minister in court against the government.

Wayne McLennan of dana Naye Ventures, which has been tasked with collecting the loans, told the Star last week Jenkins' business, Dawson City Hotels Ltd., had been issued a demand letter during the week of Nov. 21.

Jenkins had 10 days to respond to the letter and pay back his debt, said McLennan.

Dawson City Hotels Ltd.'s corporate lawyers have been in negotiations on the loans for 'quite some time,' Jenkins told the Star this morning.

He added discussions are continuing.

Jenkins said he was not involved with any of the negotiations until just a couple days ago, following his resignation from cabinet.

The resignation means he doesn't have to distance himself from the negotiations as much as previously, said Jenkins. Last week, he said he did not have any knowledge of the demand letter nor the pending court documents.

Vancouver-based lawyer Alan A. Frydenlund is representing the government.

Jenkins' lawyers are also based in Vancouver, though he wouldn't name them and no response has yet been filed in court on his behalf.

The court documents claim Jenkins signed as a guarantor for the sum of $125,000, which was initially issued as part of the territory's Business Development Fund.

The documents state Jenkins is in 'default' under the terms of his mortgage, loan and guarantee '...as a result, the full balance due and owning thereunder is now due and payable...'.

In addition to the more-than $300,000 debt, the documents indicate Jenkins is required to pay $114.57 a day in interest from Nov. 19 onward.

The current interest rate on Jenkins' loan is 13.57 per cent per year, compounded semi-annually.

The documents also ask that Jenkins be required to pay for the cost of the court proceedings.

If Jenkins has not repaid the debt within the next six months, the documents indicate an 'order of sale' would be issued for the Eldorado Hotel.

Other documents filed in court indicate that when Jenkins agreed to the original loans, his property, all inventory, equipment and accounts at the hotel, 'instruments, securities, intangibles, consumer goods and other property property...including money and documents of title' were collateral.

The high interest rate on the loan and poor tourist seasons have been the major challenges in repaying the amount owed, said Jenkins.

The last profitable year for the hotel was 1998, he said.

When the business is profitable, money is put against the loan, said Jenkins, but because of the high interest rates, the business has been unable to start paying down the principal amount.

As of Oct. 1, 2005, approximately $50,883 has been put against the loans, all but $3.80 of which is interest payments.

The company has not made a payment in eight years.

In total, there were 10 payments made on the first loan and another 13 on the second.

The last payment on the first loan was made in August 1991. The last payment for the second was made in September 1996.

Jenkins said the company is committed to negotiating some sort of resolution.

There are approximately 50 people employed at the Eldorado during the summer season and 12 to 15 over the winter, he said, adding he doesn't want to see the hotel's contribution to Dawson's economy nor the jobs disappear.

'It's all political, too,' said Jenkins, citing the inaction on the loans by past NDP and Liberal governments.

Negotiation and restructuring of the loans has been an ongoing issue for the governing parties since 1999.

The Yukon Party government awarded custody of 42 delinquent debts files to dana Naye last March.

The government gave dana Naye a $350,000-advance to start the collection, with $50,000 going toward collecting the debts and the rest being used to provide loans to small businesses.

The first $350,000 collected by dana Naye was to be returned to the government.

The rest of the $2.1 million in repayable moneys will be divided between the company and the government.

Eighty-five per cent will be used by dana Naye to hand out more loans to small businesses and 15 per cent will be returned to the government.