Wednesday, June 29 2022

When Alex Jones’s business entities filed bankruptcy cases just days before a lawsuit was set to award damages for defamation, a Justice Department supervisor and a group of Sandy Hook families questioned the timing and legitimacy of the action. last minute that put everything on hold.

What may have surprised some observers Friday, however, was the number of questions and concerns that federal bankruptcy judge Christopher Lopez expressed about Jones’s filings after the judge determined that, for the time being, he take no action to sanction the bankruptcy process.

“No one is going to make any progress today,” Lopez told a crowd of 70 attorneys and observers, shortly after the South Texas Bankruptcy Court videoconference hearing began. “(But) I have questions and I’m going to get my questions answered.”

What followed was a spirited two-hour hearing on the country’s highest-profile defamation cases, which have been making national headlines for a month.

“Clearly there is a lot of emotion on both sides, which is completely justifiable,” Lopez said. “I think some of these concerns are legitimate.”

Lopez’s main concern was how Jones was proposing to use the bankruptcy process to pay damages in three cases of defamation he lost to the Sandy Hook families in Texas and Connecticut, without Jones himself declaring bankruptcy.

Jones proposed doing this by declaring InfoWars and two other business entities bankrupt and establishing a “litigation settlement trust” to be administered by two former Texas bankruptcy judges. The trust would be funded by Jones himself and his Free Speech Systems, starting with $10 million.

The reason Jones would have to fund the trust is because two of the business entities in question are out of cash and the third has a monthly income of $38,000, his representatives said.

That worried Lopez.

“One of the concerns that I have is … if the third-party filer decides to go offline at any point, the lifeblood of these Chapter 11 cases will be gone,” Lopez said. “There has to be some guaranteed source of funds … and it can’t be based on something I haven’t approved.”

Jones’s own representatives did little to clear up any doubts Friday when they admitted they were tweaking the details of that dispute resolution trust as they spoke.

“On the settlement fund, I want the parties to have a chance to negotiate to get comfortable with it in light of all the things that have been said about it,” said Kyung Lee, Jones’s lead bankruptcy attorney.

“I must tell you that the parties have worked very hard in good faith to come up with a proposal to pay creditors and pay them fairly,” Lee said. “This allows for a resolution to disputes that have been going on for years… (but) I hear nothing but complaints from those who want the money or those who are entitled to the money.”

Rightly so, lawyers for the Sandy Hook families responded.

“They want the benefit of bankruptcy without being broke,” said Randy Williams, an attorney representing an FBI agent and 14 people from eight families who lost loved ones in the Sandy Hook massacre. “Mr. Jones and (Free Speech Systems) are sitting on the sidelines, but that’s not right; they’re getting the upper hand in preventing that case from moving forward on Monday, and our people are waiting to settle their claims.”

An attorney for a Justice Department official who oversees bankruptcy cases in southwest Texas agreed.

“These cases appear to be orchestrated by (Jones) to limit his liability and the liability of the FSS,” said Jayson Ruff, who represents US trustee Kevin Epstein.

Protecting the brand of Alex Jones

Jones himself was not in the courtroom, because Jones himself did not file for bankruptcy.

When asked why Jones didn’t file for bankruptcy, a representative said Jones was afraid of losing credibility with listeners and product sales would suffer.

“InfoWars is a prominent trademark in the conspiracy theory community and Alex Jones is equally prominent,” said Marc Schwartz, the proposed restructuring director for the bankrupt Jones business entities. “It would ruin his name and damage his ability to sell merchandise.”

At the moment, the Jones defamation lawsuits in Texas and Connecticut are on hold.

It is the latest development in a series of adverse events for Jones, whose fortunes changed after he called the 2012 massacre of 26 first-grade students and educators “staged,” “synthetic,” “fabricated,” “a giant hoax” and “completely fake with actors.”

In bankruptcy court Friday, Schwartz said Jones paid $10 million in attorneys’ fees because of the Sandy Hook defamation cases, and that Jones saw his income drop by $20 million.

Schwartz, who described the Jones brand as the “Coca-Cola of the conspiracy theory community,” said the Jones name generated merchandise sales of at least $76 million in fiscal 2019.

“If you look at the impact of litigation in 2021, your estimated revenue…is $56 million, or $20 million less,” Schwartz said.

Lopez scheduled a status conference for April 29 when he hopes to get an update and have at least one motion to dismiss the Sandy Hook family attorneys’ bankruptcies.

“Your honor, this is just not right, this is illegitimate,” said Williams, the attorney for the Connecticut families. “We intend to file an emergency motion to dismiss.”

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