The Justice Department is challenging a bankruptcy filing by far-right Infowars radio host Alex Jones involving three companies after he lost defamation lawsuits filed by families of Sandy Hook massacre victims.
The Chapter 11 filing “raises numerous questions — the answers to which may demonstrate these cases are an abuse of the bankruptcy system,” stated court documents submitted Thursday by the U.S. Trustee Program, the Justice Department’s bankruptcy watchdog.
Chapter 11 filings allow a business to keep operating — and pause civil litigation — while working out a plan to get out of debt.
Jon Beatty, an attorney for Sandy Hook victims’ families, characterized Jones’ move as a “sinister” strategy to duck liability in his comments Friday at a federal bankruptcy hearing in Texas, where Jones lives. Another attorney for the plaintiffs, Cliff Walston, noted to the judge that Jones and his companies have reported $56 million to $78 million a year in revenue, according to the Austin American-Statesman.
The families plan to file a motion to dismiss the bankruptcy reorganization action.
The conspiracy theorist and his companies were found liable last year in Connecticut and Texas after Jones repeatedly claimed that the shooting deaths of 20 children and six adults at Sandy Hook Elementary School in Connecticut in 2012 was a “hoax” staged by “crisis actors” as part of an anti-gun stunt. He now admits the massacre did happen.
Not only did Jones profit from his lies, but families of the dead children were also subjected to death threats, hate mail and phone calls from his supporters after Jones attacked the families on his radio program.
An upcoming trial had been scheduled to determine the amount of damages Jones and his companies had to pay. But last Sunday, Jones, a multimillionaire, filed for bankruptcy protection for InfoW, which owns copyrights and domain names related to InfoWars.com, IWHealth and Prison Planet TV.
The U.S. Trustee Program is urging that the judge reject Jones’ request to appoint supervisors to oversee a proposed limited victim compensation fund. The strategy “seems to be just the first step for Debtors to carry out Jones’s ... scheme of avoiding the burdens of bankruptcy while reaping its benefits,” the trustee said in court papers.
Kyung Lee, an attorney for Jones’ companies, insisted the move was a “good faith effort here to do something constructive” that would allow “resolution of the bickering that has been going on for 10 years,” Bloomberg reported.
A court filing earlier this month by the parents suing Jones accused him of already diverting millions of dollars to an “alphabet soup” of shell companies to dodge damages by squirreling away his assets. The suit claims that he drew $18 million from his companies after the first suit was filed against him in 2018.
“If I’m a plaintiff, I don’t trust any of this,” Patrick Jackson, a restructuring lawyer based in Delaware who has handled cases with similar legal disputes, told Bloomberg. “There is a good argument here that these companies don’t have any business in bankruptcy.”
Lawyers representing Jones and his businesses had argued that the defamation lawsuits were aimed at squelching free speech on matters of public interest.
There was no ruling in the bankruptcy reorganization case Friday. The parties will meet next on April 29 for a status conference.