Chattanooga-based Luken Communications has been losing money for years, company officials said at a Bankruptcy Court creditors meeting on Thursday.
Matthew Winn, executive vice president, said the provider of TV programming from bygone days, needs to generate about $700,000 per month to cover expenses, but brings in about $400,000 a month.
"It has always operated at a loss," he said.
Henry Luken is listed as being owed $17,718,127. The other owner, Forrest Preston, Life Care Centers of America executive of Cleveland, Tn., is owed $18 million.
Mr. Winn said Henry Luken was charging the firm $21,000 per month rent.
The bankruptcy was triggered when an Arkansas jury returned a $47.4 million verdict against Luken Communications in connection with a deal in which Henry Luken acquired Retro TV. The jury found it involved a "fraudulent transfer". An appeal of the verdict is expected.
Bankruptcy Judge John Cook, earlier Thursday, said he was going to allow the judgment to go down in the Arkansas case, saying he was "not going to retry" that matter.
The bankruptcy was filed on a Sunday following the Friday verdict and before the judge had time to prepare the order of judgment.
Mr. Luken, who made a fortune in the 1980s with a low-cost long distance phone service, did not attend the meeting. Several of his lawyers did, including Jim Fields, Bill Horton and Jerry Farinash. Tom Ray is also to be added to the team.
Jim Owens, who had teamed with the Luken firm to bring back The Nashville Network, was at the meeting in a wheelchair. He claims he is owed $431,156.
Also present was Chip Baker, executive director of Friends of the Festival, which has a claim for $45,000.
Mr. Winn said Luken Communications is considering several options, including streamling its operations or selling all its assets. He said no decision has been made yet. There are currently 38 employees.
Luken owns eight broadcast subsidiaries.
Mr. Winn said tapes of old TV shows acquired by the firm are kept in a secure, climate-controlled building on East Eighth Street.
He said the company has become embroiled in lawsuits in several states, including Florida, New York and California.
Mr. Winn said over the past year and a half the Luke firm has not renewed a number of contracts as they have come back up for renewal.