Merit Street Media Inc., a Fort Worth-based media company, has reached a comprehensive settlement agreement that resolves multiple contested issues in its Chapter 11 bankruptcy case, including challenges to the legitimacy of the filing itself, according to court documents filed September 15, 2025.
The three-way settlement involves the debtor, Peteski Productions Inc.—which serves as the company's debtor-in-possession (DIP) lender—and the Official Committee of Unsecured Creditors. The agreement establishes a recovery pool of $10 million to $17 million for general unsecured creditors and sets up an expedited timeline for asset sales, with an auction scheduled for October 22, 2025.
The settlement represents a significant development in the bankruptcy case filed in July 2025 in the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division (Case No. 25-80156). The case had been marked by contentious litigation, including motions to dismiss the bankruptcy filing altogether by Trinity Broadcasting of Texas Inc., TCT Ministries Inc., and Professional Bull Riders LLC.
Financial Terms and Creditor Recovery
Under the settlement terms, Peteski Productions has agreed to fund a "GUC Recovery Pool" that will provide general unsecured creditors with distributions equal to the lesser of $17 million or the amount required to guarantee a 10% recovery on allowed claims—with a minimum commitment of $10 million. This recovery rate is notably high for bankruptcy proceedings, where unsecured creditors often receive minimal distributions.
"The GUC Recovery Pool shall be at least $10.0 million," the settlement document states, with Peteski required to fund the pool on the effective date of any approved reorganization plan.
The settlement also restructures the case's professional fee arrangements, increasing the committee's budget to $4.31 million and establishing separate carve-out accounts for debtor and committee professionals totaling $4.75 million combined.
Asset Sale Timeline Accelerated
The agreement establishes an aggressive timeline for the sale of Merit Street Media's assets. Key dates include:
- September 16, 2025: Final hearing on DIP financing and bidding procedures at 9:30 a.m.
- October 17, 2025: Bid deadline at 4:00 p.m. Central Time
- October 22, 2025: Auction, if necessary
- November 3, 2025: Sale hearing
- November 10, 2025: Anticipated closing date
The settlement parties have agreed to "affirmatively support on the record or otherwise file a pleading in support of the Sales," according to the filing.
Litigation Rights Preserved and Released
In a complex arrangement, the settlement carves out different treatment for various litigation claims. While estate causes of action against Peteski will be released under the settlement, claims against Trinity Broadcasting and Professional Bull Riders will be contributed to a litigation trust for the benefit of unsecured creditors.
The settlement establishes up to $2.5 million in funding to pursue these remaining estate claims, with any amounts allocated to litigation credited against Peteski's required contribution to the creditor recovery pool.
The agreement includes broad third-party releases that would protect Merit Street Media's current and former directors and officers, Peteski and its related parties, and the creditors committee from most claims related to the bankruptcy case and pre-petition matters.
Opposition Withdrawn
As part of the settlement, the parties agree to withdraw their previously filed objections and motions, including Trinity's motion to dismiss the bankruptcy case and Professional Bull Riders' joinder in that motion. The creditors committee and Peteski have also agreed to support final approval of the DIP financing facility.
Notably, Peteski has agreed to waive its rights to "roll up" pre-petition bridge loans into its DIP facility—a concession that benefits other stakeholders by not elevating those claims to superpriority administrative status.
Legal Representation and Next Steps
Merit Street Media is represented by Sidley Austin LLP, with Thomas R. Califano and Jeri Leigh Miller handling the matter from the firm's Dallas office, and Stephen E. Hessler and Patrick Venter from New York. Peteski Productions is represented by Matthew D. Cavenaugh of Jackson Walker LLP, while the creditors committee is represented by Greg Wilkes of O'Melveny & Myers LLP.
The settlement requires court approval and incorporation into Merit Street Media's Chapter 11 plan. A hearing on the DIP financing and bidding procedures is scheduled for September 16, 2025, at 9:30 a.m. Central Time, where the court will consider approval of key aspects of the settlement framework.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 17 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.