Dr. Phil’s Company Converted to Chapter 7

U.S. Bankruptcy Judge Scott W. Everett converted Phil McGraw’s Merit Street Media bankruptcy from Chapter 11 to Chapter 7, ordered liquidation, and appointed a trustee to sell the company’s assets and oversee related litigation, including disputes over the disposition of Merit Street’s media library. Everett found Merit Street was “dead as a doornail,” concluded McGraw lacked candor—citing deleted text messages and other evidence that he sought to favor certain creditors and manipulate the bankruptcy process—and raised concerns about the credibility of Merit Street’s chief restructuring officer and the composition of the unsecured creditors committee. Merit Street, a joint venture formed by McGraw’s Peteski Productions and Trinity Broadcasting Network (TBN), has accused TBN of breaching the contract while TBN has counterclaimed with fraud. TBN and Professional Bull Riders (PBR) have accused McGraw of using the Chapter 11 filing to dilute their stakes and evade contractual obligations, prompting TBN’s emergency motion to convert the case. The decision came amid revelations that McGraw launched a new venture, Envoy Media, and moved employees and assets in ways the court found suspicious; McGraw and Peteski deny destroying evidence and plan to appeal.