Total Fail: Alex Jones’s Ploy To Evade Sandy Hook Plaintiffs By Running To Bankruptcy Court Not So Crafty After All

Curses, foiled again!
The post Total Fail: Alex Jones’s Ploy To Evade Sandy Hook Plaintiffs By Running To Bankruptcy Court Not So Crafty After All appeared first on Above the Law.

A month ago, Alex Jones’s lawyers marched into bankruptcy court in Victoria, Texas and declared three LLCs associated with his Infowars media company insolvent. The companies were named defendants in tort suits brought by family members of Sandy Hook shooting victims, who faced years of harassment after the podcaster told his deranged audience that the grieving parents were “crisis actors” participating in hoax designed to whip up support for gun control legislation.

Jones ran to the bankruptcy court on the eve of a jury trial in Texas to determine how big a check he was going to have to cut, having already defaulted there and in the case brought in Connecticut thank to his years-long refusal to comply with discovery. And he made no pretense that the purpose of the bankruptcies was to resolve the Sandy Hook litigation: the plaintiffs were listed as the LLCs’ primary creditors; the LLCs proposed setting up a Litigation Settlement Trust, funded by Jones, and capping his liability at $10 million conditional on the plaintiffs dropping their claims against him and his main company, Free Speech Systems (FSS); and his proposed Chief Restructuring Officer Mark Schwartz testified on April 22 that “The purpose is to arrange to pay all of the plaintiffs the amount of their—let’s say in a bankruptcy sense, their allowed claim in full.”

Jones’s non-bankruptcy lawyer Norm Pattis was even less circumspect, which is pretty on-brand. “We’re turning to the bankruptcy courts to compel the plaintiffs to estimate the value of their claims in open court by discernible evidentiary standards,” he told the Wall Street Journal, adding that, “The plaintiffs have turned this litigation into a macabre morality play and have refused to negotiate in good faith. We hope they will show respect to the federal courts.”

And it worked… at least for a minute. The Texas and Connecticut cases were put on hold before a jury could hear any evidence, without forcing Jones and FSS, which made $56 million in 2021, to declare bankruptcy or disclose their finances. But not for much more than a minute.

In addition to filing motions to dismiss the filing for debtor abuse, the Texas and Connecticut plaintiffs both nonsuited the LLCs from their state tort claims, effectively removing themselves as creditors in the instant bankruptcy. And during Friday’s hearing — which you can listen to at your convenience, because there’s an MP3 of the proceeding right on the docket! — it appeared that the Sandy Hook plaintiffs and the LLCs are close to a stipulated agreement to dismiss them from the bankruptcy and remand the tort claims to state court.

Which leaves an interesting question: What the hell is the purpose of this bankruptcy if it’s not going to resolve the Sandy Hook claims?

The companies are functionally shells, with no assets and no business; they have very few creditors now that the Sandy Hook plaintiffs are noping out; and Jones and FSS have zero incentive to fund the Litigation Settlement Trust if it doesn’t accomplish their goal of forcing the plaintiffs to accept a pittance to drop their tort claims.

“If you reach resolution with the Connecticut plaintiffs and Texas plaintiffs, sounds like whatever non-bankruptcy litigation that’s pending out there in Texas or CT will go on without these debtors involved. What does that do to the trust documents and the funding of this case?” wondered US Bankruptcy Judge Christopher Lopez.

Which is a fair point! If a shell company falls in Victoria, Texas (where it recently decamped to from Austin, for reasons not entirely clear), and there are no creditors there to hear it, does it make a sound? And is the sound an allegation that yet another mass shooting is a “false flag” operation, as Jones said yesterday about the massacre in Buffalo on Friday by a gunman screaming racial epithets and spouting the “Great Replacement” theory. (Slow learner!)

For his part, the LLCs’ lawyer Kyung Lee insists that there will be no “abandonment of the process,” because there are “creditors which still have to be dealt with,” although he acknowledges that there will have to be “a different funding agreement,” not least to ensure that he gets paid. (Well, he didn’t mention that part.)

The next scheduled hearing is May 27, and it remains on the docket only because the parties haven’t codified their agreement to send the Sandy Hook plaintiffs on their way. But the Texas and Connecticut judges have assured the parties that the cases would get back on track immediately upon remand from the bankruptcy court.

Which can only mean that we’ll be following Alex Jones’s shenanigans for at least the rest of 2022. Hosanna!

InfoW, LLC (22-60020) [Bankruptcy Docket, via Court Listener]

Liz Dye lives in Baltimore where she writes about law and politics.