Use the demo at:
 http://demos.telerik.com/aspnet-ajax/editor/examples/overview/defaultcs.aspx  

Select html mode and clear all existing text
Enter some text and format it as bold, italic and underline 
Enter 2 new lines (breaks)  
Insert a 3x3 table using the table button in the editor 

Result: When the table is inserted the text loses its formatting. See attached file.