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Luken Communications, the Chattanooga-based parent company of Retro TV, the Nashville Network and a half dozen other television networks, has filed for bankruptcy after an Arkansas jury awarded a $47.4 million verdict against the company for a “fraudulent transfer” of the ownership of the RTN network six years ago.
A hearing is set in U.S. Bankruptcy Court today at 2:30 p.m. to hear motions in the Chapter 11 filing in which the Luken Communications seeks to reorganize its finances under court protection. Luken’s bankruptcy filing on Sunday came just two days after a federal jury in Little Rock, Ark., awarded $47.4 million to a bankruptcy trustee representing creditors of the former bankrupt Equity Media Holdings Corp.
In the lawsuit against Luken Communcations, creditors for Equity Broadcasting said the company slid into bankruptcy in December 2010, just two and a half years after the transfer of RTN to Luken Communications. The lawsuit claims Luken’s purchase price of $18.5 million in 2008 was only 16 percent of the $115.8 million the company was valued at just seven months earlier.
The jury on Friday agreed with plaintiffs that the transfer of RTN from Equity Media to Luken Communications was made "with actual intent to hinder, delay, or defraud" Equity Media. The complaint also alleged that the transfer might have "resulted in Equity Media becoming insolvent."
Luken Communications was founded and headed by Henry Luken, who also owns real estate, boat building and jewelry TV businesses.
The bankruptcy filing by Luken Communications in Chattanooga lists Cleveland businessman Forrest L. Preston, chairman of Life Care Centers of America, as the biggest unsecured creditor with an $18 million unsecured claim. Henry Luken has a $17.7 million unsecured claim in the company.
Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...