TV networks owned by Chattanooga multimillionaires could head to auction block

Henry Luken

Forrest Preston

The broadcast TV networks owned by Chattanooga multimillionaires Henry Luken and Forrest Preston could go to the highest bidder following a legal setback in in Arkansas, as the entrepreneur prepares to appeal his case before a federal appellate court.

A reorganization plan submitted to U.S. Bankruptcy Court in Chattanooga calls for the sale of Luken Communications for at least $2 million, as attorneys appeal an out-sized $65.9 million judgment handed down by an Arkansas court.

Luken Communications was forced to file for bankruptcy last year after a jury agreed that the purchase price of $18.5 million Luken paid for the company’s assets in 2008 was too low, and effectively robbed its then-parent company, Equity Media, of its only substantial asset. Equity, meanwhile, was left owing more than $100 million to various creditors.

Equity’s bankruptcy trustee argued that the sale to Luken, who resigned as a board member of Equity Media in order to purchase its TV business, forced Equity into bankruptcy since it no longer had any way to repay creditors.

U.S. District Judge Kristine G. Baker upheld that verdict in 2014 and upped the jury’s judgment against Luken from $47.4 million — already the largest in Arkansas history and among the largest ever in the U.S. — to an unprecedented $65.9 million after Luken filed a motion to retry the case.