Dr. Phil McGraw’s media startup, Merit Street Media, has officially been shut down by a federal judge, who ruled the network must be liquidated under Chapter 7 bankruptcy. The decision comes after what the judge described as a failed attempt to shield close associates from financial losses while dodging debts owed to major partners.
Bankruptcy Judge Scott Everett didn’t hold back.
“There is no hope for rehabilitation,” he wrote, accusing McGraw of lacking transparency and deleting text messages that revealed a scheme to pay “favored creditors.” One of those messages, uncovered through another person’s phone, showed McGraw promising to reimburse investor Jamie Ribman no matter how the court ruled.
The ruling ends a bitter legal standoff between McGraw, Trinity Broadcasting Network (TBN), and the Professional Bull Riders (PBR) league. Merit Street, launched just a year ago, sued TBN for breach of contract, claiming sabotage. TBN countersued, accusing McGraw and his production company, Peteski, of orchestrating a “years-long fraudulent scheme” to secure a $500 million deal.
The situation worsened when McGraw formed Envoy Media a day before filing for bankruptcy, intending to move Merit’s assets and staff there. Emails showed him calling the plan a “gangster move” to remove TBN’s control and “wipe out” claims from both TBN and PBR, who said they were owed $181 million.
Judge Everett blasted the entire structure of the case, calling it a “broken three-legged stool.” He cited McGraw’s influence, the conduct of Chief Restructuring Officer Gary Broadbent, and the favoritism toward Ribman’s trust as factors undermining the process.
Peteski Productions has vowed to appeal. Meanwhile, both TBN and PBR praised the judge’s decision, hoping a neutral trustee will now oversee what’s left of McGraw’s failed network.
More fallout is expected as Envoy Media pushes forward.
