A Tennessee communications firm has filed for commercial bankruptcy in response to a monetary judgment of $47.4 million against one of its owners. A jury awarded the $47.4 million in a lawsuit brought by the trustees of Equity Media Holdings Corp, a company already in bankruptcy. The lawsuit claimed that the purchase of Retro Television Network by Luken Communications for $18.5 million was a fraudulent transfer as the company had been valued at $115.8 million several months before the purchase.
The company intends to continue business as usual while it undergoes bankruptcy and reorganization of its finances under court protection. A recent decision by the U.S. Bankruptcy Court in Chattanooga ruled that the company may meet its payroll for its employees. Meanwhile, the company’s owner is appealing the jury verdict, saying that he purchased the company when he did in order to keep it afloat — not to get it at a bargain.
When a business faces large debts and demands from creditors, filing for Chapter 11 bankruptcy can afford that business the ability to keep the company running while reorganizing its debts. The ultimate goal of a Chapter 11 filing is to allow a business to continue to operate free from creditor demands so that it is able to work at paying its debts while it avoids having to close its doors.
If your company is faced with financial obligations that it cannot meet, or threats of foreclosure and repossession of business equipment, you may wish to consult an attorney experienced in the field of business bankruptcy. An attorney can review your situation and advise you on the best steps to take to ensure your company’s long-term survival.
Source: Chattanooga Times Free Press, “Luken Communications to continue business as usual as it appeals Arkansas jury verdict,” Ellis Smith, June 27, 2013