TV personality Dr. Phil McGraw has been charged with masterminding a multi-million dollar cover-up and evidence destruction in relation to the failure of his company's media venture.

U.S. Bankruptcy Judge Scott Everett, in a RadarOnline report on October 28, ordered Dr. Phil's company, Merit Street Media, into Chapter 7 liquidation, stating that creditors would be better off if an independent trustee sold its assets.

At the hearing, Judge Everett was severe in his words against the 75-year-old TV personality. "Candor to the court is critical," the judge averred, referring to proof that McGraw had erased damaging text messages and tried to "game" the bankruptcy system by paying off favored creditors first.

Everett added, "Mr. McGraw's business was as dead as a doornail when the bankruptcy was filed... Mr. McGraw believed he was calling the shots."

A representative from McGraw's production company, Peteski, made a statement in his defense. "We respectfully disagree with the court's ruling and take issue with its comments concerning Dr. Phil McGraw," the representative said.

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"Dr. Phil is a leader of the highest integrity whose actions reflect honesty, ethics, and a life-long commitment to helping people... We are reviewing all of our options regarding an appeal, which is likely."

The fight is over a $500 million arrangement between Dr. Phil and the Trinity Broadcasting Network (TBN). Merit Street Media, the joint venture between McGraw and TBN, sought Chapter 11 bankruptcy protection earlier this year, only to have the network countersue, alleging "reprehensible conduct" and attempting to avoid its commitments.

According to Variety, court filings showed that McGraw had previously described his move as a "gangster move" to reduce TBN's equity position. The judge went on to observe that McGraw erased a message regarding the destruction of claims by TBN and another creditor, Professional Bull Riders, to cover up the evidence.

Taking the witness stand in June, McGraw maintained he was innocent. "I'm like the little engine that could," he testified. "I'm doing everything I can to keep Merit up and running. This theory, that this was all a ploy to set up Envoy Media, is absurd."

Despite the legal setback, McGraw continues his career through Envoy TV, a 24/7 network he recently launched in partnership with Charter Communications. "I'm thrilled to be putting on the Charter team jersey and launching our new flagship Envoy TV network," McGraw said earlier this month.

With the court's ruling as it is, McGraw is at risk of liquidation and further investigation, with his lawyers indicating an appeal will follow within weeks.

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