office furniture that former staffers on the Livin’ Large production set saw repossessed, shutting down the show’s posh Wilshire Boulevard offices last November. Also according to court documents, THN owes more than $2 million to former employees and employees of its subsidiaries, which include the production companies formed specifically to produce its shows. Staffers of Heritage 215, which produced Livin’ Large in Los Angeles, and Heritage 215 II, which produced Weekend VIBE in New York, have filed state wage claims against THN. The company also owes the IRS nearly $12,000 in back taxes for unpaid payroll taxes for Livin’ Large employees.
Independent production companies, ad agencies, and show talent weren’t spared either. Stevie “Black” Lockett, former Mike Tyson camp coordinator, movie producer, and co-creator of Livin’ Large, warns anyone against working with Mercado-Valdes, who he says “doesn’t play fair.” Bankruptcy records show that THN owes Lockett more than $100,000. The show’s other creator, famed concert promoter and straight-to-DVD movie producer Jeff Clanagan, former host Carmen Electra, and producer Suzanne de Passe, are also owed more than $1 million collectively.
Court records reveal that THN cut off health insurance benefits and 401(k) matching funds to longtime employees, one of whom has filed an $187,500 proof of claim against the company for failing to make good on 401(k) payments. At the same time, Mercado-Valdes was publicly generous, giving a $1 million donation to Florida A & M University.
Can Mercado-Valdes’ replacement turn the troubled company around? It’s still anyone’s guess. At the outset of THN’s bankruptcy troubles, officials outlined a 100-day turnaround plan to “right-side” and stabilize the company, which may have already been instituted by Walker. Walker remains involved in bankruptcy proceedings for Hookt.com, which had its case converted to Chapter 7 liquidation in 2003. Yet, Walker, who is getting paid $19,000 a month for his turnaround expertise, is convinced that he can achieve a different result for THN.
The turnaround plan called for a reorganization under a new Delaware C limited liability company, Heritage Media Group, and contains plans to restore the ailing company to profitability within 18 months after the court confirms its formal reorganization plan. In Delaware, a corporation can be established with no minimum capital contribution and can qualify to do business in any state in the U.S. and in most countries around the world. Heritage Media Group, which is co-owned by Walker, will acquire THN for some $6 million. The acquisition, which has been approved by the court, ensures that THN remains black-controlled.
Under the original plan, Mercado-Valdes would have stayed on with the new corporation as a media consultant. He’d have no equity interest but would earn a salary of $8,000 a month. Since the onset of its bankruptcy problems, THN has submitted more than three versions of its restructuring plan and three or more amended plans of reorganization. After its last reorganization plan was denied, THN announced that Mercado-Valdes would no longer be affiliated in any way with the new corporation and no longer has any equity interest.