When Alex Jones’ business entities filed for bankruptcy just days before a trial was set to award libel damages, a Justice Department overseer and a group of Sandy Hook families questioned the timing and legitimacy of the 11 a.m. action that suspended everything.
What may have surprised some observers on Friday, however, was the number of questions and concerns that federal bankruptcy judge Christopher Lopez expressed about Jones’ filings after the judge determined that for the time being, he would do not act to sanction the bankruptcy process.
“Nobody is moving forward on anything today,” Lopez told a crowd of 70 attorneys and observers, shortly after the start of the South Texas Bankruptcy Court videoconference hearing. “(But) I have questions and I will get my questions answered.”
What followed was a spirited two-hour hearing on the country’s most high-profile defamation cases, which made national headlines for a month.
“There’s clearly a lot of emotion on both sides, which is completely justifiable,” Lopez said. “I think some of those concerns are legitimate.”
Lopez’s main concern was how Jones was proposing to use the bankruptcy process to pay damages in three defamation cases he lost to the Sandy Hook Families in Texas and Connecticut, without Jones himself filing for bankruptcy.
Jones proposed to do so by filing for bankruptcy with InfoWars and two other business entities and creating a “litigation trust” to be administered by two former Texas bankruptcy judges. The trust would be funded by Jones himself and his Free Speech Systems, starting at $10 million.
The reason Jones should fund the trust is because two of the business entities in question have no cash and the third has a monthly income of $38,000, his representatives said.
It was about Lopez.
“One of the concerns I have is … if the third-party contributor decides to pull the plug at any time, the lifeblood of these Chapter 11 cases will be gone,” Lopez said. “There has to be a guaranteed source of funds…and it can’t be based on something that I haven’t approved.”
Jones’ own reps didn’t help clarify matters on Friday when they admitted they were changing details of that dispute settlement trust as they spoke.
“On the settlement fund, I want the parties to have the opportunity to negotiate to get comfortable with everything that’s been said about it,” said Kyung Lee, Jones’ senior bankruptcy attorney.
“I have to tell you that the parties have worked very hard and in good faith to come forward with a proposal to pay creditors and pay them equally,” Lee said. “It resolves disputes that have been going on for years… (but) I only hear complaints from those who want the money or those who are entitled to it.”
With good reason, the lawyers for the Sandy Hook families responded.
“They want to benefit from bankruptcy without being bankrupt,” 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 staying out of it, but that’s not right; they have the advantage of keeping this case from moving forward on Monday, and our people are waiting to liquidate 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 that of FSS,” said Jayson Ruff, who represents U.S. Administrator Kevin Epstein.
Protecting the Alex Jones Brand
Jones himself was not in the courtroom, as Jones himself did not file for bankruptcy.
When asked why Jones did not file for bankruptcy, a rep said Jones was worried about losing credibility with auditors and product sales would suffer.
“InfoWars is a prominent trademark in the conspiracy theory community and Alex Jones is equally important,” said Marc Schwartz, proposed restructuring manager for the bankrupt Jones Business Entities. “It would ruin his name and hurt his ability to sell goods.”
At this time, Jones’ libel suits in Texas and Connecticut are waiting.
It is the latest development in a series of adverse events for Jones, whose fortunes turned after he called the massacre of 26 first-graders and educators “staged”, “synthetic”, “fabricated”, “a giant hoax” and “completely bogus with actors”.
In bankruptcy court on Friday, Schwartz said Jones paid $10 million in attorney fees due to Sandy Hook’s defamation cases, and that Jones saw his income plummet 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 the fiscal year. 2019.
“If you look at the litigation impact in 2021, his estimated revenue … is $56 million, down $20 million,” Schwartz said.
Lopez has scheduled a status conference for April 29 when he expects to get an update and at least have a motion to dismiss the Sandy Hook family lawyers’ bankruptcies.
“Your honor, it’s just not fair – it’s illegitimate,” Connecticut families’ attorney Williams said. “We intend to file an emergency motion to dismiss.”
rryser@newstimes.com 203-731-3342
