Dr. Phil's ongoing bankruptcy filing with Merit Street Media, his short-lived Texas-based media company, is encountering another snafu as it has been hit with a $500 million countersuit.
The TV personality, 74, founded the company in 2023 (and officially launched in April 2024) as a TV network in a joint venture with Trinity Broadcasting Network, aka TBN, to serve as a platform for true crime programming, to be heralded by the follow-up to his popular syndicated series Dr. Phil.
However, just a month ago, he filed for a Chapter 11 bankruptcy, alleging also that TBN had reneged on their obligations as a network. Things got more complicated when Merit Street filed to remove their bankruptcy proceedings because the costs were mounting.
Now, TBN has fired back with a countersuit of its own on their $500 million deal. Their action states: "The response to TBN legitimately and lawfully defending itself from Peteski and McGraw's bad-faith attacks is to cry foul because they do not like the true facts that they themselves now regretfully put at issue before this Court, revealing McGraw's true illicit intent and wrongful conduct which he self-described as a 'gangster move' and as '11th-hour poker'," per Deadline.
A spokesperson for Dr. Phil's production company, Peteski Productions, shared a statement with HELLO! on the case as well, refuting TBN's claims. "TBN's latest lawsuit is riddled with provable lies, and is part of a lawfare litigation strategy designed to distract people so no one notices when TBN ultimately is held accountable for walking away from its commitments here."
"Among other things, they claim we didn't create any episodes. A simple check of IMDb tells the real story – we created more than 200 episodes. People lost their jobs and Peteski Productions has incurred millions of dollars of losses because of TBN's bad behavior. We will continue to fight for justice in this case."
Bankruptcy attorney and expert Sarah Foss, Head of Legal at the bankruptcy and restructuring powerhouse Debtwire, shared some insight with HELLO! on the case, opining that the TV personality and his company are "attempting to save face by hiding documents."
She explained that despite Merit Street filing to dismiss their Chapter 11, it will continue as planned, even without the funds necessary to pay the legal team.
"The bankruptcy judge presiding over Merit Street's Chapter 11 case said today that the company's bankruptcy will move forward for now, despite the company consenting to dismissal of its bankruptcy because it does not have the funds, specifically the money to pay its lawyers, to continue with what is likely to be an expensive, and litigious Chapter 11 case."
She noted that the judge in the case sided with TBN especially due to a "resistance of discovery," which implies a hesitance on Dr. Phil and his team's part to make documentation and correspondence public or available for the sake of the proceedings.
"The judge has initially sided with Trinity Broadcasting Network and Professional Bull Riders, stating that Merit Street is at fault for delaying the case by resisting discovery and it is therefore not going to fund what Trinity and PBR call a 'giant litigation war chest' for the company's professionals."
She adds: "The discovery resistance may be tied to reputational concerns from Dr. Phil, and what might be revealed in text messages or emails that come out in the discovery process."
She did also highlight: "Notably, the judge overseeing the bankruptcy denied a request from Merit Street's bankruptcy counsel, Sidley Austin, to withdraw from the case before that hearing, despite being owed $3.7m in unpaid legal fees and a lack of funds to pay the lawyers for their work representing the company at the hearing."
A decision on whether to dismiss the case or convert it to a Chapter 7 bankruptcy will be made on September 2.