(Bloomberg) – Advisors to bankrupt firms linked to far-right radio host Alex Jones shed light on the conspiracy theorist’s business dealings in bankruptcy court on Friday while promising transparency – and money – to the families of the Sandy Hook shooting victims suing him for defamation.
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Three corporations linked to Jones and his Infowars website filed for Chapter 11 bankruptcy this week in a bid to repair as-yet-unquantified damages owed to the Sandy Hook families who successfully sued him for calling the 2012 hoax massacre. Jones himself did not go bankrupt, nor did the most lucrative corner of his business, prompting a plaintiff’s attorney to call the maneuver “ridiculous stuff.”
At the first hearing of the bankruptcy case on Friday, advisors to Infowars entities said their goal was to pay the families through a fair process, free from Jones’ influence. The radio host relinquished his control in the pre-bankruptcy holding companies and agreed to fund a settlement trust to pay plaintiffs and resolve the long-running libel battle.
“There is a good faith effort here to do something constructive with the bankruptcy process,” Kyung Lee, an attorney for Infowars entities, said during the hearing. “There may be warts on it and yes, it’s not perfect”, but it will allow “a resolution of the quarrels which have been going on for 10 years”, he said.
The idea is to funnel about $10 million into a trust to be divided among the claimants over five years in proportions that will be approved by the bankruptcy court, advisers said at the hearing. The process would bring plaintiffs into one forum — the bankruptcy court — to negotiate, rather than proceeding to separate damages lawsuits that were scheduled to take place in Texas and Connecticut this year.
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, up from about $80 million in previous years, proposed restructuring manager W. Marc Schwartz told the court. He said the company has recently struggled to maintain relationships with suppliers and banks.
Schwartz said advisers don’t want Jones or Free Speech Systems to file for bankruptcy because it could damage their reputation with suppliers and further hurt sales. Since bankrupt entities don’t make a lot of money themselves, they rely on Jones to fund the settlement.
The proposed settlement structure has drawn little to no praise from attorneys representing the families suing Jones, who have called the bankruptcy an attempt to save Jones from trial for his Sandy Hook comments.
“Your honor, that’s just not fair. It’s illegitimate,” said Randy Williams, an attorney for the plaintiffs suing Jones in Connecticut. Williams said he would file an emergency petition to dismiss bankruptcy. Jones and Free Speech Systems have already been found liable in the lawsuits, but lawsuits over the amount of damages have now been halted due to the Chapter 11 filing. Jones and Free Speech Systems “want to benefit from bankruptcy without being at risk.” bankruptcy,” Williams said.
U.S. Bankruptcy Judge Christopher Lopez, who is overseeing the case, said he heard legitimate concerns during the hearing but stressed it was too early to draw conclusions on the Chapter 11 case.
“I don’t legitimize or delegitimize anything,” Lopez said. “We will run a process based on the Federal Rules of Bankruptcy Procedure, the Bankruptcy Code and due process.”
A status conference is set for April 29.
The main case is InfoW LLC, 22-60020, US Bankruptcy Court, Southern District of Texas.
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