'Peter (Jenkins) joined me walking (into the legislative assembly), and I said, Where'd you come from?' and he said, Oh, just from outside,' Opposition Leader Todd Hardy says as he recounts the surprise that welcomed the opposition parties in the house early Monday afternoon.

'I looked and he wasn't carrying anything, and I was thinking, What?'

'Are you just coming from a meeting?' and he says Oh, no.'

'We walk in and he keeps coming with me (to the opposition side of the house) and I keep looking around and I said, Are you just fooling around or what?' and he says, You'll see' and then I realized, Oh my goodness.''

Jenkins, who has spent almost three years serving as the deputy premier of the Yukon Party government and the government house leader, has resigned from his position in the cabinet and the Yukon Party, where he also served as the minister of Health and Social Services and Environment.

For the first time, at 1 p.m. Monday, he took his seat in the legislative assembly as an independent MLA.

Neither the NDP nor the Liberals knew ahead of time Jenkins had resigned and in a day many expected Arthur Mitchell, the newly-elected Copperbelt MLA and Liberal leader to take the spotlight, all eyes instead turned to Jenkins.

The media were only told minutes before question period of Jenkins' resignation.

Premier Dennis Fentie said Jenkins' departure was related to the more-than $306,000 worth of loans the now-former cabinet minister owes the Yukon government.

'As I understand it, last week, while I was out of the territory, a demand was issued to Mr. Jenkins with respects to the loans file,' Fentie told reporters.

'In discussions subsequent to that demand, it was evident that Mr. Jenkins has informed his colleagues that the government accept an offer from himself or else.

'The government has chosen the or else' and in this instance, it means we've accepted Mr. Jenkins' resignation and by his own choice, he's going to sit as an independent.'

Jenkins' movement to sit as an independent means he will take a $21,147 annual pay cut.

As a Yukon Party cabinet minister, he was earning an annual salary of $77,298. He will now make $56,151.

After being chased by reporters out into the parking lot following question period, Jenkins said his decision has nothing to do with the loans.

'The issue is certainly surrounding my riding and what's going on there,' he said. 'I can't seem to get anywhere and bring it to a head.

'My constituents are basically saying, Look, we don't have an arena, we don't have a rec centre, we don't have a swimming pool that's functional.' There have been $22 million worth of money spent in the community and that should tell you something.

'It's the second-largest population base in the Yukon and people are leaving Dawson because of the lack of recreation facilities.'

On the floor of the legislature, Jenkins maintained his departure from the Yukon Party and cabinet was related to concerns in his Klondike riding and specifically in Dawson.

'The crux of the problem is what everyone knows it's Dawson City. The heart and soul of my community has been ripped out by inefficiencies of government at the municipal level and the territorial level, and it's reverberating within the family units of our whole community,' he told the house.

Jenkins drew reference to Dawson's sewage treatment plant, the rec centre, arena, curling club and the current forensic audit in the town as failures and concerns.

'The whole issue as to why I am leaving government is predicated on what has happened or not happened in my community,' he said.

He went on to ask the government to conduct a full public inquiry into the situation in Dawson.

Fentie did not make eye contact with Jenkins while he made his statement. Many of his other former colleagues also examined their desks.

Yet, throughout much of the question period, many of them grinned across the floor at Jenkins.

Fentie took an opportunity to wave to Jenkins where he now sits in the seat formerly occupied by Haakon Arntzen. That former MLA left the Yukon Party caucus following charges that eventually resulted in his May 2005 conviction and sentencing for the indecent assaults of two women in the 1970s.

'There's a real change in the demeanour of the members opposite. They just seemed like a lot of the stress and tension had lifted,' said Liberal MLA Pat Duncan, who on Monday sat next to Jenkins, her longtime adversary. This afternoon, however, she and Mitchell sat beside each other, with Jenkins in the row behind them.

'It's just so typical of Mr. Jenkins, you just blame everybody else,' she said of the reasons Jenkins provided for his abrupt resignation. 'It speaks volumes about the government ethics, integrity, leadership.'

Jenkins outright denied any knowledge of the loans issue, the demand letter or probability of a pending court date that Fentie informed reporters of.

The Yukon Party government committed itself to chase down the loans, and entered into an agreement earlier this year with Dana naye Ventures to have the company collect on all delinquent loans.

'Dana naye Ventures? No, I don't... what demands?' asked Jenkins, adding he is only aware of receiving a letter from Dana naye 'four or five months ago.'

Jenkins and his company, Dawson City Hotels, was sent a demand letter last week, Wayne McLennan of Dana naye Ventures confirmed to the Star this morning.

'The matter is in our lawyer's hands now,' he said.

There is not yet a court date, he said.

However, should there not be a full repayment of the loans or an attempt by Jenkins' company to negotiate the repayment schedule within 10 days of the issuing of the letter, documents will be filed in court, McLennan added.

'It's getting close (to the end of the 10 days),' he said, adding he is not aware of any contact being made by Jenkins.

'I am not aware of any court date. I am not aware of any foreclosure action. There may be a demand, but that's about all I'm aware of,' said Jenkins.

'I've been telling the premier in this whole thing (reasons for departure) for quite some time if that's way they are interpreting it...'

Discussions regarding the resignation have been ongoing for several weeks, said Jenkins.

The decision was ultimately made last week, he said, but he was unable to officially resign because Fentie was in Kelowna, B.C. at a first ministers' meeting.

He added he has not had a meeting with Fentie since he made his decision. Instead, Jenkins advised Gordon Steele, the premier's principal secretary, and submitted his letter of resignation on Monday morning.

'Obviously, it is something that has been discussed for a number of days,' said Fentie. 'I just got back to my office, having arrived in the Yukon late Friday night, and I have accepted Mr. Jenkins' resignation. The ultimatum was or else. Accept the offer or else.' We've accepted the or else'.'

Fentie did not speak with reporters following question period and the statement of Jenkins' reasoning for his resignation. He also did not return phone calls from the Star.

'I think it's a blow to the Yukon Party,' said Mitchell. 'He (Jenkins) was clearly someone, until very recently, who held a great deal of influence in that party and in that caucus. Certainly, looking at the portfolios, he was Mr. Fentie's right-hand man.'

Hardy agreed.

'Whether you like Mr. Jenkins or not, you have to give him credit for a couple things. He's the hardest-working minister, hands down, head and shoulders above every one of them in cabinet.

'Secondly, he knows the government and the departments better than any of them and he micromanaged them to death. Mr. Fentie has relied on Mr. Jenkins exclusively to do the heavy lifting for him.

'They lost a lot of strength. He was a weakness and a strength. The ying-yang of the party.'

However, Mitchell said he thinks Yukoners need to understand this is a 'death bed conversion.'

'I think this is too little too late,' he said, adding Fentie is trying to take 'very, very belated credit' for Jenkins' departure.

Hardy said: 'Mr. Fentie... protected him. Mr. Fentie defended him for three years and did everything to hide that loans issue.

'He can't take the high road on this.'

Hardy added that Jenkins' leaving the party is just a visual example of the disarray the Yukon Party is in.

'We've known for quite a while that there has been a lot of dissatisfaction and disagreement among the ranks of the party. What we're witnessing is this government falling apart,' he said.

Despite Jenkins' departure from the Yukon Party, he continued to speak highly of the party.

'Overall, I think you have to give the Yukon Party kudos for moving forward in a very positive manner, for restoring investor confidence,' he said.

He added he hopes his leaving may help the party, which lost the Copperbelt byelection Nov. 21 and saw polls last summer showing it would likely be the NDP forming government after the next general election.

Jenkins wouldn't commit on what his future in politics holds.

'There's a couple of options. There have been a lot of people that have been lobbying me to return to municipal politics. There's a lot of people saying, continue as an independent,' and that's an option too.'

Fentie has not yet made an announcements on who will take over Jenkins' portfolios or if there will be any other cabinet shuffle in the wake of his departure.

'We're certainly not in a big rush. We're very capable of managing the government's affairs, be it the Department of Health or any other department,' he said.