Lawyers in the Merit Street Media bankruptcy case representing Fort Worth-based Trinity Broadcasting Network and TCT Ministries were in Northern District Judge Scott Everett’s courtroom all day Tuesday, arguing for an early end to the case.
In proceedings expected to last until Thursday, the hearing comes after Dr. Phil McGraw filed for bankruptcy protection on behalf of Merit Street Media in July. That filing prompted responses from Trinity Broadcasting Network and TCT Ministries, arguing that the TV psychologist had no corporate authority to file for bankruptcy and that the court should end the proceeding.
Foley & Lardner partner Mark Moore told Judge Everett that Merit Street Media and McGraw did not have the corporate authority to file for Chapter 11 bankruptcy in July and that he acted in bad faith by doing so.
Moore called McGraw’s actions a “scheme” and asked the court to dismiss the proceeding.
Sidley Austin partner James Ducayet, who is representing Merit Street Media, argued McGraw did have the authority to file for bankruptcy and asked Judge Everett to deny the motion to dismiss and move forward with Chapter 11.
“It’s a lot of noise. The evidence is going to back it up,” Ducayet said.
Jackson Walker partner Charles Babcock gave the opening for Peteski Productions, which produces television content. He told the court that bankruptcy was the last resort. He noted that TBN transferred the waivers for cable to Merit Street, but then the network became unavailable in several cities, like Los Angeles and Washington, D.C.
Jackson Walker partner Chris Bankler called the allegation of bad faith “mudslinging.”
“These allegations are a distraction,” Bankler said.
McGraw could testify Wednesday. The hearing on the motions is expected to last through Thursday.
The Origins
The television network Merit Street Media launched in April 2024 by celebrity television psychologist McGraw, a year after he ended his two-decade run of Dr. Phil on CBS.
Fort Worth-based Merit’s lawsuit accused Trinity and its affiliate TCT Ministries of failing to fulfill their obligations under a 2023 agreement that established Merit Street. Merit alleges Trinity violated the agreement by charging for production services, not covering distribution costs and delivering a “shoddy” production work.
According to its bankruptcy filing from July, Merit has between $100 million and $500 million in assets but also has liabilities in the same range.
Several creditors are listed, including DirecTV, which is owed $1.7 million, and Dish Network, which is owed $900,000. Merit Street also owes $700,000 to Peteski Productions — the Wichita Falls-based production company owned by McGraw that supplies Merit Street with content, the filing said.
Professional Bull Riders claims Merit Street owes it $181 million, which includes seeking damages for breach of contract.
Benesch’s Chicago-based trial practice group chair Nicholas Secco represented the Professional Bull Riders, which were broadcast on Merit Street Media.
Secco told the court “no man is above the law” in referring to McGraw.
In November 2024, PBR terminated its contract with Merit Street Media for alleged unpaid rights fees and moved to other platforms.
Secco asked the court to convert the Chapter 11 bankruptcy proceeding filed by McGraw into a Chapter 7 bankruptcy proceeding, arguing there is “no reasonable likelihood” of rehabilitation.
“See through the ruse,” Secco said.
Peteski Productions and TBN formed the joint venture named Merit Street Media in 2023, with Peteski producing episodes and TBN distributing them to a nationwide audience.
In court filings with the U.S. Bankruptcy Court for the Northern District of Texas, the Christian broadcasters said the adversary complaint, which seeks declaratory and monetary relief, should be dismissed because it was filed without the approval of Merit Street’s full board of directors.
They claim Gary Broadbent, the company’s chief restructuring officer, was never validly appointed to the “special committee” that authorized the Chapter 11 bankruptcy petition and the lawsuit.
Trinity and TCT stated that Merit Street’s corporate governance rules — along with a voting agreement between McGraw’s Peteski Productions and Trinity — required that directors appointed by Trinity could not be removed without its approval. They argue that the two Trinity-appointed directors were ousted in violation of that agreement, leaving McGraw as the sole director to appoint Broadbent.
Shortly after filing for bankruptcy, McGraw launched Dallas-based ENVOY Media Co., a new media venture that delivers live news, original entertainment and interactive content across traditional and digital platforms.
Sidley Austin partners James Ducayet, Stephen Hessler, Steven Sexton, senior managing associates Jeri Leigh Miller, Weiru Fang, Andrew Rodheim and Patrick Venter are representing Merit Street Media.
Foley & Lardner partners Rajiv Dharnidharka, Steven Lockhart, Mark Moore, Holland O’Neil and Robert Slovak, associates Nora McGuffey and Stephanie McPhail, and senior counsel Davis Mosmeyer III are representing Trinity Broadcasting and TCT Ministries.
The case is Merit Street Media Inc. v. Trinity Broadcasting of Texas Inc. and TCT Ministries Inc., 25-08006.