The North Hollywood company owes more than $3 million to about 85 creditors and has only $1.5 million to $3 million in assets, according to its Chapter 11 bankruptcy filing.

The filling came as a creditor was about to foreclose on the company's property and seize its library of more than 250 films.

"We had no alternative but to file to protect the assets of the corporation," Chief Executive Philip Starr said.

The business has been losing money for two years because of mismanagement, Starr told the Los Angeles Times without elaborating. The company also has been the subject of an inquiry by a federal grand jury in New York, Starr told the newspaper without offering details.

Kelly was president of the company under her real name, Adrianne D. Moore, but she quit this year.

Starr said that he was brought in a month ago to turn the company around.

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