International Kirkland gets ready to file for bankruptcy protection

If International Kirkland Minerals (IKI-V) can’t persuade one specific creditor to exchange shares for debt the company may have to file for bankruptcy protection.

Kirkland Minerals owes this creditor $243,510, which represents about 33% of the company’s total debt.

The creditor has told Kirkland that it may petition the company into bankruptcy.

Kirkland has reached debt settlement agreements with nine other creditors – mostly service providers and consultants – for an amount totaling $526,277. The agreements, reached in April, were based at 4¢ per share, which was the closing price of Kirkland on April 15.

Kirkland doesn’t really have any other options because it’s unable to do a financing.

In April, the company announced a non-brokered private placement for $300,000 at 3¢ per unit (for one share and one warrant exercisable at 5¢) but the company couldn’t proceed with it.

The reason was that insiders made up 25% of the financing but financings involving insiders or arms length parties would force the company to settle with all of its creditors.

Kirkland has also failed to make a $25,000 payment on the Creelman-Roberts uranium property near Sudbury on time, and the property has gone back to the vendor.

Kirkland says if it can’t convince the remaining creditor to do a debt settlement agreement, it will then consider filing a proposal under the Bankruptcy and Insolvency Act. In that case the company would do an equity financing and would have to eliminate all of its debts.

Kirkland shares fell 25% today or half a cent to 0.015¢ on a trading volume of nearly 707,000 shares. The company has 20.7 million shares outstanding.