Infowars Bankruptcy Lawyers Promise Cash, Fairness to Sandy Hook Families
Infowars Bankruptcy Lawyers Promise Cash, Fairness to Sandy Hook Families
(Bloomberg) -- Advisers for bankrupt companies tied to far-right radio host Alex Jones shed light on the conspiracy theorist’s business operations in bankruptcy court Friday while promising transparency -- and cash -- to families of Sandy Hook shooting victims suing him for defamation.
Three corporate entities linked to Jones, and his website Infowars, filed for Chapter 11 bankruptcy this week in an attempt to corral yet-unquantified damages owed to Sandy Hook families who successfully sued him for calling the 2012 massacre a hoax. Jones himself didn’t go bankrupt, though, and neither did the most lucrative corner of his business, prompting one plaintiff’s attorney to call the maneuver a “ridiculous trick.”
In the first hearing in the bankruptcy case Friday, advisers for the Infowars entities said their goal is to pay the families through a fair process free from the influence of Jones. The radio host gave up his control in the holding companies prior the bankruptcy and has agreed to fund a settlement trust to pay claimants and resolve the long-running defamation battle.
“There is a good faith effort here to do something constructive with the bankruptcy process,” Kyung Lee, an attorney for the Infowars entities, said in the hearing. “It may have some warts on it and yes, it’s not perfect,” but it will allow for “a resolution of the bickering that has been going on for 10 years,” he said.
The idea is to funnel to a trust about $10 million that will be divvied out to claimants over five years in proportions that will be approved by the bankruptcy court, advisers said in the hearing. The process would bring claimants into a single forum -- bankruptcy court -- to negotiate, rather than proceed with separate damages trials that were set to go forward in Texas and Connecticut this year.
Infowars Revenue
Infowars makes most of its money selling clothing, vitamins and mineral supplements through an entity called Free Speech Systems LLC, which is not bankrupt. Free Speech Systems generated about $56 million in revenue last year, down from about $80 million in years prior, proposed Chief Restructuring Officer W. Marc Schwartz said in court. He said the company has recently been struggling to maintain relationships with vendors and banks.
Schwartz said advisers didn’t want Jones or Free Speech Systems to file for bankruptcy because it could damage their reputations with vendors and further hurt sales. Since the bankrupt entities don’t make much money themselves, they’re relying on Jones to fund the settlement.
The proposed settlement structure drew little to no praise from lawyers representing families suing Jones, who characterized the bankruptcy as an attempt to spare Jones from facing trial over his comments on Sandy Hook.
“Your honor, this just isn’t right. This is illegitimate,” said Randy Williams, a lawyer for plaintiffs suing Jones in Connecticut. Williams said he would file an emergency motion to dismiss the bankruptcy. Jones and Free Speech Systems have already been found liable in the lawsuits, but trials over the amount of damages have now been halted because of the Chapter 11 filing. Jones and Free Speech Systems “want the benefit of bankruptcy without being in bankruptcy,” Williams said.
U.S. Bankruptcy Judge Christopher Lopez, who is overseeing the case, said he heard some legitimate concerns during the hearing but emphasized that it’s too early to draw conclusions about the Chapter 11 case.
“I’m not legitimizing or de-legitimizing anything,” Lopez said. “We’re going to run a process based on the federal rules of bankruptcy procedure, the bankruptcy code and due process.”
A status conference in the case is set for April 29.
The main case is InfoW LLC, 22-60020, U.S. Bankruptcy Court, Southern District of Texas.
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