Dr. Phil Must Liquidate His Media Company After Losing Bankruptcy Trial

It looks like Dr. Phil's going to be asking for some advice in the near future ... because he just took a major loss in his company's bankruptcy trial.

A U.S. bankruptcy judge ordered the proceeding to switch over to a Chapter 7 liquidation case ... as opposed to keeping things in a standard Chapter 11 bankruptcy case on Tuesday, according to Variety.

The trial's centered on the fate of Merit Street Media, a television network startup which was the result of a collaboration between Christian not-for-profit broadcaster TBN and Phil's Peteski Productions. The company was launched in April 2024, and it filed for Chapter 11 bankruptcy protection in July this year.

Merit Street's higher-ups then sued TBN, alleging breach of contract, and TBN subsequently countersued Phil McGraw and accused him of clandestinely trying to "enrich" himself on their dime.

Northern District of Texas Judge Scott W. Everett eventually settled on having the case converted to Chapter 7 -- meaning Merit Street's going to be dissolved, and its assets will be sold in order to pay creditors.

Everett included a note about McGraw in his ruling, stating he found McGraw had deleted a text message in which he reportedly detailed his plans to "wipe out" the claims made by both TBN and Professional Bull Riders, one of the company's creditors.

The judge said sticking with a Chapter 11 case would allow Phil to focus on paying back his "favored creditors" as opposed to his "unfavored creditors," and added a Chapter 7 case would be a better overall move for creditors.