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Perennial net/net Lazare Kaplan International (LKI), which we last profiled on July 8th, is currently in the throes of a trading halt on AMEX, as a result of its failure to file the company's 10K in a timely manner. In fact, no shares have exchanged hands since September 15th. On Thursday, LKI submitted a plan to NYSE AMEX outlining how it intends to regain compliance with exchange listing requirements.

This type of situation is rarely, if ever good news. Lazare did not file its 10K in order to resolve "a material uncertainty concerning the collectability and recovery of certain assets, and "the Company's potential obligations under certain lines of credit and a guaranty". While the Company believes it will file it's 10K by 12/15/2009, delisting is certainly a possibility. Lazare has also stated intentions to trade over-the-counter if the Exchange does not approve the plan.

As we stated in the July piece, LKI was in a dangerous situation, and although we knew we were putting capital at risk, we still believed the Company had some potential value, in excess of the $1.16 per share we paid in March.

A brief conversation with CFO William Moryto last week yielded no new information, for obvious reasons.

While we presume there is bad news on the way for shareholders, we certainly would not mind being paid in inventory (polished and rough diamonds) in the event of a liquidation. It's too early to tell how this will end, but such situations are never surprising in the land of the net/nets.

Stay tuned.

Disclosure: The author has a position in Lazare Kaplan (LKI).

Source: Lazare Kaplan Trading Halt: This Can't Be Good