Merit Street Media: Judge Converts Dr. Phil Network to Chapter 7 After Evidence Destruction Finding

In the Merit Street Media case, a federal judge converted Dr. Phil McGraw's chapter 11 case to Chapter 7 liquidation after finding that he had destroyed evidence, formed a competing company the day before filing, and never intended to reorganize. The ruling represented a rare judicial determination of bad faith in a corporate bankruptcy.

"This Chapter 11 case is an anomaly," Judge Scott W. Everett declared from the bench on November 18, 2025. "There never has been a pretense of a rehabilitation or a reorganization." The court found McGraw had deleted a text message describing his strategy as a "gangster move" to wipe out creditors—text that was supposed to be preserved for litigation. The evidence destruction finding undermined the debtor's credibility and proved central to the conversion determination.

The network launched in April 2024 to over 80 million homes with distribution comparable to CNN—described as the largest network TV launch in decades. Yet Merit TV averaged 27,000 primetime viewers in 2024, ranking 130th among broadcast and cable outlets. By Q2 2025, primetime viewership had fallen to 17,000. Full-year 2025 data showed Merit Street dropped 41%—the worst-performing network of 2025 with average primetime viewership of 16,000 viewers. The gap between distribution and viewership remained large.

The bankruptcy became a contested dispute among McGraw's production company Peteski Productions, Trinity Broadcasting Network (the 70% controlling partner), and Professional Bull Riders (with a ). Each party accused the others of fraud, breach of fiduciary duty, and bad faith. Judge Everett characterized Merit Street as "dead as a doornail" and ordered liquidation to proceed while multiple parties pursue appeals.