Merit Street is the media venture tied to Dr. Phil McGraw, Peteski Productions, and Trinity Broadcasting Network (TBN). Many of the underlying allegations remain disputed, and this article separates what the court found from what parties claimed.
Below: the company's background, a timeline, the court's reasoning, creditor issues, and what to watch next. Status information is current as of October 20, 2026, and this is informational content, not legal advice.
Key Takeaways
- Filed July 2, 2025 (Chapter 11, N.D. Texas, No. 25-80156); converted to Chapter 7 by order entered November 18, 2025.
- The court cited lack of a neutral fiduciary, failure of candor, and bad faith.
- Trustee Daniel J. Sherman now administers the estate.
- Conversion does not resolve the TBN, PBR, or other litigation claims.
- Appeals remain pending.
Merit Street Media: Company and Bankruptcy Background
Business model and structure
The debtor's first-day declaration describes MeritTV as a free, advertiser-supported multicast television service with a MeritTV+ phone app. It says the service debuted April 2, 2024, and claims a reach of 100 million TV homes and connected devices. That figure is the debtor's own representation, not an independent audience count.
The declaration says Merit Street and TBN signed a binding letter of intent on January 10, 2023. TBN formed APG Ventures, later renamed Merit Street Media, with an initial proposed split of 70% TBN / 30% Peteski. The parties reportedly amended the agreement in August 2024 to raise Peteski's share, and the U.S. Trustee later called Peteski the majority shareholder. No single final cap table is readily available.
Per the declaration, TBN was to provide production and distribution, and Peteski was to supply Dr. Phil programming. The debtor's correct captioned name is Merit Street Media, Inc.
Alleged causes of distress
All of the following are the debtor's allegations unless noted:
- TBN owed quarterly payments of $5 million in the first year and breached repeatedly starting July 2024.
- PBR sent a breach notice on October 2, 2024 over a missed $3.5 million monthly installment, then terminated the agreement November 2. Merit Street countered that PBR failed its production and promotion duties.
- Equity fundraising ran February through May 2025 without success, while Peteski kept funding the company.
- About 71 employees were affected by 2025 reductions in force.
The Chapter 11 filing and financing
Merit Street signed a June 30, 2025 bridge agreement with Peteski for $6,966,636. Its July 2 DIP motion sought roughly $21.4 million from Peteski, with a $4.1 million interim advance; the court entered an interim order July 3. The U.S. Trustee objected to the insider roll-up and liens on Chapter 5 causes of action. Those were objections, not findings.
A later motion sought $10 million in unsecured, administrative-priority financing, and a Second Interim Order followed on September 5, 2025. The amount actually drawn is not clear from the public record.
Timeline of the Merit Street Media Bankruptcy Case
| Date | Event |
|---|---|
| Jan. 10, 2023 | Letter of intent between Merit Street and TBN |
| Apr. 2, 2024 | MeritTV debuts, per the debtor |
| Oct. 2 / Nov. 2, 2024 | PBR breach notice, then termination |
| June 30, 2025 | Peteski bridge agreement |
| July 2-3, 2025 | Chapter 11 petition, DIP motion, interim order; TBN adversary complaint filed |
| July 18, 2025 | Trinity Broadcasting of Texas and TCT Ministries seek dismissal or other relief |
| Aug. 2025 | PBR joins the motion and seeks discovery |
| Sept. 5, 2025 | Second Interim DIP Order |
| Oct. 28, 2025 | Court announces ruling after multi-day hearing |
| Nov. 18, 2025 | Conversion order and memorandum decision |
| Nov. 2025 | Peteski/McGraw and Merit Street appeal |
| July 30, 2026 | Trustee report for period ending June 30 |
| Sept. 28, 2026 | District court denies mandamus petition without prejudice |
Where reports diverge
Bloomberg reported on July 3, 2025, that the company laid off all but six employees and ended production at filing. The debtor's declaration describes about 71 employees affected by earlier cuts, and the court later referred to nearly all employees being fired on the petition date. The records do not reconcile these accounts.
The court also said McGraw was already moving business to Envoy before the petition, but the cited ruling does not give Envoy's formation date.
Why the Case Moved From Chapter 11 to Chapter 7
Chapter 11 versus Chapter 7
In Chapter 11, the debtor usually stays in possession and may keep operating while it reorganizes. Chapter 7 centers on a trustee liquidating nonexempt assets and distributing proceeds.
Under 11 U.S.C. § 1112(b), a court may convert or dismiss for cause, whichever serves creditors and the estate best, unless a Chapter 11 trustee or examiner is the better option.
The court's reasoning
The court's stated grounds:
- No neutral fiduciary. Doubt about the CRO's neutrality and investigation, plus a finding of failure of candor.
- Bad faith. McGraw deleted a text with relevant, unfavorable evidence; a later memorandum treated that as bad-faith evidence, not a standalone conversion ground.
- No operating business. "Virtually no employees, virtually no operations," negative monthly cash flow, and little left but a media library and litigation.
- Envoy. Pre-petition move of the business toward Envoy, Merit personnel working for Envoy without charge, and a planned media-library purchase treated as outside the ordinary course.
On control, the court did not resolve every dispute. It found Trinity had ratified McGraw as sole board member while authority was sorted out, even though Trinity alleged he was running the case through Peteski.
The court also weighed a Chapter 11 trustee as an alternative and chose conversion.
What conversion did not decide
Conversion changed who controls the estate. It did not adjudicate:
- TBN's claims
- Merit Street's claims against TBN
- PBR's counterclaims
- Personal liability questions
- What the assets are worth
Stakeholders, Assets, and Creditor Issues
Main parties
- TBN/TCT: Moved for dismissal or other relief; the debtor alleges TBN breached the venture agreement.
- Peteski/McGraw: Bridge and DIP lender; appealed the conversion.
- PBR: Disputed Merit Street's performance and asserted a $181 million claim, reported by the Dallas Morning News. That is an asserted figure, not an adjudicated debt.
- Trustee Sherman: Represents the estate.
- Employees and vendors: No adjudicated claim total is available.
Assets and claims
The trustee's report for the period ending June 30, 2026, lists gross remaining asset values of $95,615,748.87 (excluding unknown values). That figure includes $33,889,049.61 in digital production inventory, with $0 in sale proceeds received.
These are report values, not net value or expected recovery. The TBN adversary complaint and PBR counterclaim carry unknown values.
Epiq's register showed 1,635 claims, but submitting a claim does not make it allowed. The general bar date was September 12, 2025, and the governmental bar date was December 29, 2025.
How distribution works
Under Section 726, Chapter 7 proceeds are paid in this order:
- Timely claims with § 507 priority
- Timely general unsecured claims
- Specified late claims, penalties, and postpetition interest
- Any surplus to the debtor
Claims in the same class are generally paid pro rata. Secured creditors' rights in their collateral are separate. A large claim does not mean full payment.
Creditors should follow trustee notices, sale motions, and objection deadlines through official channels. Restructuring professionals can use BankruptcyData's filing, docket, and stakeholder intelligence to monitor this case and compare it with other U.S. distressed situations. It is a research tool, not legal advice, and it does not guarantee recovery.
Current Status and What Happens Next
Status as of October 20, 2026
- Sherman remains Chapter 7 trustee; his report projects a final report for March 31, 2027.
- The latest docket entry is #735 (September 11, 2026), TBN/TCT's objection to Sidley Austin's fourth interim fee application.
- The trustee reports that an appeal is pending. On September 28, the district court said briefing in 3:25-CV-3190-L was incomplete and it had not ruled.
- An administrative stay was granted early in the appeals, but public filings do not confirm whether one remains in force.
- No completed sale is on record.
Likely next steps
Expect these developments as the case moves forward:
- Trustee review of assets and claims
- Possible sale processes and valuation work
- Litigation or settlement of the TBN and PBR matters
- Distribution motions and eventual closing
What to watch
- Trustee reports and the March 2027 final report
- Sale notices and objections
- Appellate rulings in the two district-court appeals
- Adversary proceeding activity
- Any confirmed development involving Merit Street assets or Envoy Media (none appears in the public record)
Predictions about creditor recovery, appeal outcomes, or Envoy acquiring assets would be speculation without a filed order.
Frequently Asked Questions
Is Merit Street still on?
The bankruptcy case is active under Chapter 7. Bloomberg reported production ended at filing in July 2025, and continuing distribution is not readily confirmed from available case records.
What happened to Merit Street Media's bankruptcy case?
It began as a Chapter 11 case on July 2, 2025, and was converted to Chapter 7 on November 18, 2025. As of October 20, 2026, the trustee administers it and appeals are pending.
Why was Merit Street Media moved from Chapter 11 to Chapter 7?
The court cited lack of a neutral fiduciary, failure of candor, and bad faith, and noted almost no operations beyond a media library and litigation. It also considered a Chapter 11 trustee.
What does Chapter 7 liquidation mean for Merit Street Media?
A trustee controls the estate, sells assets, and administers claims. Liquidating the estate does not resolve the related lawsuits.
How much does Merit Street Media owe its creditors?
A reliable scheduled total is not readily available from the petition materials. Epiq shows 1,635 claims, and PBR's reported $181 million is asserted, not adjudicated.
What is the relationship between Merit Street Media and Envoy Media?
The court said McGraw was moving the business to Envoy before the petition and discussed a planned Envoy purchase of the media library. Envoy's formation date and any asset transfers are not established.
