TV personality Dr. Phil‘s bankruptcy case is not going the way he wanted it to.
Dr. Phil, whose full name is Phil McGraw, cannot keep the bankruptcy of his media startup Merit Street Media in Chapter 11, Judge Scott W. Everett of the U.S. Bankruptcy Court for the Northern District of Texas ruled on Tuesday, according to audio of the hearing reviewed by Entertainment Weekly.
It will instead move forward as a Chapter 7 liquidation, and a trustee will oversee both the sale of Merit Street Media’s media library and litigation over whether Trinity Broadcasting breached its contract with the company, leading to its bankruptcy.
OWN Network
Merit Street was established by Peteski Productions, which is McGraw’s production company, and Christian broadcast company Trinity Broadcasting Network.
Merit filed for Chapter 11 in July, amid financial problems and alleging that TBN had reneged on more than $100 million of financial responsibilities. TBN then countersued.
In court, Everett reviewed details of the case, including McGraw’s deletion of a text message that was part of discovery in the case, an action that the judge said was considered in his ruling.
“Mr. McGraw’s actions violated not only the discovery order…but also a broader principle that the debtors, board members, or de facto officers or agents should not destroy property of the estate to help them in pending litigation,” Everett said.
With a Chapter 7 trustee, “creditors can have faith that the process will play out fairly and neutrally,” he continued.
“Dismissal, on the other hand, would allow Mr. McGraw to pay his favored creditors and not pay his unfavored creditors, as his own deleted text makes clear he wants to do. Dismissal would also allow the debtor or friendly creditors to file another bankruptcy case in a different jurisdiction to try to get different rulings that favor Mr. McGraw and his interests, including on the pending sanctions motion that I’ve yet to rule on,” he said.
Everett also noted that conversion to Chapter 7 is in the best interests of the creditors in the estate, because costs would be lower against an already strained estate and that there would be no dramatic effect on employees or ongoing business operations, as “the debtor’s business was as dead as a doornail when they filed bankruptcy and nearly all the debtor’s employees were fired on day one.”
Get your daily dose of entertainment news, celebrity updates, and what to watch with our EW Dispatch newsletter.
The decision will be appealed, a spokesperson for Peteski told The Hollywood Reporter.
“We take great exception to the court’s improper assertions regarding the alleged destruction of evidence, which simply did not happen,” a statement read. “We will not let this stand given all that Dr. Phil and Peteski Productions have done to protect Merit Street employees, distributors, and other interested parties and to resolve this unfortunate situation.”
McGraw, whose signature talk show launched in 2002, came to prominence in the late ’90s when he appeared on The Oprah Winfrey Show. The Oklahoma native’s signature is his thick accent and his straight talk.
Now 75, he’s also known for his longtime marriage to wife Robin, whom he married in 1976.
Source link
