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Infowars Files for Bankruptcy Amid Sandy Hook Lawsuits

Bloomberg logoBloomberg 4/18/2022 Rachel Butt and Jeremy Hill
Alex Jones © Bloomberg Alex Jones

(Bloomberg) -- Companies tied to far-right radio host Alex Jones filed for bankruptcy in an effort to settle litigation brought by relatives of children killed in the 2012 Sandy Hook massacre. 

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Three entities, including one that holds the rights to website Infowars, sought Chapter 11 protection in Victoria, Texas, on Sunday. Each estimated liabilities of as much as $10 million, according to court filings. Chapter 11 filings allow a business to keep operating while working on a turnaround plan and pause pending civil litigation. 

Lawyers set up a trust that would pay people suing the companies, and Jones handed over his equity in the entities to the trust. The units in bankruptcy “have no purpose other than to hold assets which may be used by other entities” and their only liabilities are the litigation claims, according to court papers. Free Speech Systems LLC, the ultimate parent company of Infowars, which Jones still owns, isn’t part of the bankruptcy filing.

Alex Jones © Bloomberg Alex Jones

Jones and his companies last year were found liable in a defamation lawsuit brought by relatives of Sandy Hook victims after Jones called the shootings a hoax. A trial in Connecticut to determine the size of the damages has yet to take place. He was also found liable in similar proceedings in Texas.

By establishing a trust to settle legal claims in bankruptcy, Jones’s companies are following a controversial playbook used by other corporations facing significant lawsuits. Companies including opioid maker Purdue Pharma LP and youth organization Boy Scouts of America have sought Chapter 11 protection to settle thousands of cases and streamline payouts to victims claiming harm. 


Video: Conspiracy theorist Alex Jones' website Infowars files for bankruptcy (NBC News)

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Jones put $725,000 of his own money into the trust to cover the costs of the Chapter 11 filings. Additional funds, including $2 million cash, could flow into the trust as a result of the bankruptcy, according to court papers. Two former bankruptcy judges -- Russell F. Nelms and Richard S. Schmidt -- are overseeing the trust. 

The trust is a way to ensure litigation creditors can be paid in full, rather than get uneven payouts simply due to the timing of trials, lawyers for the companies said in court papers. Jury selection for the Texas trial is set to begin next week, while the Connecticut trial is still months away. 

Read More: Alex Jones’s Businesses Tap Advisers, Weigh Possible Bankruptcy

Lawyers representing Jones and his businesses have said the Texas defamation lawsuit was strategically filed to silence their free speech on matters of public interest. 

Judges in Connecticut and Texas issued default judgments against Jones after he failed to turn over documents including financial information. Lawyers representing Jones have argued the plaintiffs’ probe into the financial ties between Jones and his various entities is akin to a “collections action” and a “fishing expedition.”

In March, lawyers representing relatives of Sandy Hook shooting victims sought an arrest order for Jones after he skipped a court-ordered deposition, citing health reasons. Jones appeared for the deposition after facing hefty fines.

The main case is InfoW LLC, 22-60020, U.S. Bankruptcy Court, Southern District of Texas. 

(Adds details on trust beginning in lead.)

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