Infowars Bankruptcy Looks A Lot Like Alex Jones Trying To Dodge Sandy Hook Fallout, Legal Experts Say

AUSTIN, TX - APRIL 18: Infowars founder Alex Jones interacts with supporters at the Texas State Capital building on April 18, 2020 in Austin, Texas. The protest was organized by Infowars host Owen Shroyer who is join... AUSTIN, TX - APRIL 18: Infowars founder Alex Jones interacts with supporters at the Texas State Capital building on April 18, 2020 in Austin, Texas. The protest was organized by Infowars host Owen Shroyer who is joining other protesters across the country in taking to the streets to call for the country to be opened up despite the risk of the COVID-19. (Photo by Sergio Flores/Getty Images) MORE LESS
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InfoWars, a media outlet owned by far-right conspiracy theorist Alex Jones, and two other companies owned by Jones have filed for bankruptcy. This all comes after Jones lost three defamation lawsuits to the families of the Sandy Hook shooting victims.

But legal experts tell TPM that while the filing is bankruptcy on its face, it could all be part of an effort to delay accountability and reduce the amount he’ll have to pay the families in damages.

Infowars, Infowars Health and Prison Planet TV all filed for Chapter 11 bankruptcy protection on Sunday in the U.S. Bankruptcy Court for the Southern District of Texas. Each company has estimated liabilities of up to $10 million, the businesses said in the court filings. Chapter 11 filings typically put a pause on pending civil litigation and allow companies to continue operations as normal as they work on a plan to reorganize.

The bankruptcy filings claim that Jones’ businesses’ “financial distress stems primarily” from the lawsuits that the families of several of the victims who were killed in the 2012 Sandy Hook Elementary School massacre had filed against Jones — after he falsely claimed the shooting was a “hoax.” Jones’ lies prompted a wave of harassment and death threats against the grieving families.

Jones has shelled out $10 million in legal costs in the Sandy Hook lawsuits (two of which are in Texas, the other in Connecticut), according to the bankruptcy filings (embedded below).

Claiming that Jones has only “limited cash on hand” and that there could be a risk that the judgement in the Texas plaintiffs’ case won’t leave enough for the Connecticut plaintiffs (whose judgement will be decided after Texas), the filings propose a “Litigation Settlement Trust” to serve as a pool from which the Sandy Hook families can collect on whatever damages get awarded to them.

Under the proposal, Jones would put in $2,725,000, plus $250,000 per quarter for 20 consecutive quarters, and that’s where the families will get the money — offering a plan that the filing argues won’t leave anyone out.

It’s a solution framed as one in everyone’s best interest, but legal experts tell TPM the whole thing smells a lot like a ploy by Jones to control, or at least add extra hurdles to, how much money he’ll have to give the families.

“It’s almost like it’s a one-sided settlement offer to the [families] as a body,” Stephen Sather, bankruptcy lawyer at Barron & Newburger based in Austin, told TPM in a phone interview on Monday.

Sather said he interprets the maneuver as Jones trying to make sure that he gets to keep his intellectual property rights out of the plaintiffs’ hands — to ensure he stays on the air after the dust settles.

Jones’ offer to the families seems to be “If you let my IP stay intact, then we will make sure you receive these funds,” Sather said, referring to the trust.

In fact, Jones himself gestured towards something that sounds like Sather’s intellectual property theory when he addressed the bankruptcy filings during his talk show on on Monday. He claimed that the Sandy Hook plaintiffs were trying to “get judgements that are giant and large that can’t be paid” so that “they can close our doors here and try to keep me from being on the air elsewhere.”

Jones’ strategy seems to be to set the limits of what the families will get from him and to “create confusion” with the bankruptcy filings, said Bruce Markell, a bankruptcy law professor at Northwestern University Pritzker School of Law.

“The whole point is to drag out the process and wear down the plaintiffs into agreeing to whatever he wants to give them,” Markell told TPM over the phone on Monday.

Put more bluntly, the endgame is to “force the plaintiffs to accept whatever table scraps Jones left in the companies’ coffers,” attorney Liz Dye wrote in her analysis of the case in Above the Law, where she frequently blogs about the many legal woes of Trump and his cronies, including Jones.

Christopher Mattei, a lawyer representing the families in the Connecticut lawsuit, said essentially just that on Monday in response to news of the bankruptcy filings — that Jones was trying to put off the hearings that’ll decide how much he’ll have to pay out to the families in damages.

“Alex Jones is just delaying the inevitable: a public trial in which he will be held accountable for his profit-driven campaign of lies against the Sandy Hook families who have brought this lawsuit,” Mattei said in a statement, per the Associated Press.

Earlier this month, the Sandy Hook families filed a different lawsuit in Texas against Jones alleging that he’d squirreled away about $18 million in assets and had begun doing so in 2018, when the families filed the defamation suits. Norm Pattis, one of Jones’ attorneys, said the allegation was “ridiculous.”

Jones pointed to that lawsuit during his show on Monday as the reason for his bankruptcy filings, claiming that he was trying to prove to the families that Infowars has “less than $3 million cash” and that he’s “essentially making no money.”

The judge overseeing the two lawsuits in Texas, where InfoWars is based, ruled in September that Jones was liable to the families after he refused to hand over requested information to the court. Then a Connecticut judge found Jones liable by default in November after he similarly failed to provide financial records to the court.

The Sandy Hook families rejected Jones’ offer to pay $120,000 to each plaintiff in the lawsuits last month, saying in court that the offer was a “transparent and desperate attempt by Alex Jones to escape a public reckoning under oath with his deceitful, profit-driven campaign against the plaintiffs and the memory of their loved ones lost at Sandy Hook.”

The amount Jones will be required to pay the families in Texas was supposed to be decided in trials that were scheduled to begin this month, while the trial to determine the amount he’ll have to pay in damages in the Connecticut case was slated to begin on Sept. 1, per the New York Times. However, it’s unclear now how the schedule will be affected by Jones’ gambit.

Read the bankruptcy filings below:

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