A federal judge in Texas has ruled that Phil McGraw, better-known as Dr. Phil, cannot file for bankruptcy under Chapter 11, a setback for the longtime talk-show host.
Instead, U.S. Bankruptcy Judge Scott Everett says McGraw must proceed under Chapter 7 liquidation for his media company Merit Street Media, according to The Hollywood Reporter.
Deadline reports that Everett criticized McGraw for “not being forthright” in regard to his business dealings and in the trial. Everett ruled the assets of Merit Street Media must be sold off to pay for McGraw’s debts.
“Candor to the court is critical,” Everett said in the hearing, according to Deadline. The judge said “crucial” communications had been erased and McGraw’s company was paying specific creditors over others.
Entertainment Weekly reports Merit Street Media filed for Chapter 11 in July. Merit accused Christian broadcast company Trinity Broadcasting Network of reneging on more than $100 million of financial responsibilities. TBN sued Merit.
A spokesperson for McGraw says the decision will be appealed, according to The Hollywood Reporter.
“We take great exception to the court’s improper assertions regarding the alleged destruction of evidence, which simply did not happen,” the spokesperson said. “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.”
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