HOUSTON, Texas (CN) — The bankruptcy case against conspiracy theorist Alex Jones reached its next stage Friday, as a Texas bankruptcy court judge agreed to convert the case to Chapter 7 liquidation, setting up a payout for families of Sandy Hook victims.
The ruling by U.S. Bankruptcy Judge Christopher Lopez follows Jones’ agreement to convert his case to Chapter 7 last Friday. No parties contested the general agreement, but the families debated with Jones on a few details.
In a related case against Jones’ company, Free Speech Systems, however, Lopez declined to dismiss that case, ruling instead to dismiss it.
Jones has spent years peddling conspiracy theories about the parents, their kids and the Sandy Hook shooting as a whole. In two cases — one in Texas and a second in Connecticut, both under appeal — the judges held Jones liable for defamation and intentional infliction of emotional distress and awarded $1.4 billion in Connecticut and $49 million in Texas, putting Jones on the hook for a combined $1.5 billion.
Lopez, who has presided over the bankruptcy cases, ruled in December 2023 that he could not discharge the $1.1 billion in actual damages.
Regardless of how this liquidation proceeds, and how the judge rules in the parallel case against Jones’ company, Jones’ personal assets will only cover a small fraction of the billion-dollar damages.
"This is probably the end of InfoWars here very, very soon,” Jones told the press before entering the courthouse.
Though the case against Free Speech Systems, which owns and operates InfoWars, has been dismissed, Jones’ personal stake in the company is not exempt from liquidation.
With no party contesting the case’s conversion itself, the courtroom debate over the personal case against Jones centered on a few details of how the conversion and subsequent liquidation should proceed.
The Connecticut families in particular brought up concerns about getting things going on-time and about sharing information from the Chapter 11 creditor committee to the Chapter 7 trustee, since the committee would be dissolved on conversion under U.S. bankruptcy rules.
Lopez declined, in the end, to include these concerns in his conversion order. He said the parties can address these issues based on the Bankruptcy Code, but he encouraged everyone to go over the relevant parts of the code before making their arguments again later.
The parallel case against Free Speech Systems took up most of the day’s discussion. Lopez had pressured the parties to conclude debate by Friday's hearing but the parties failed to reach an agreement on a reorganization plan before the hearing, leaving both sides to make lengthy arguments before the judge. And in the end, Lopez decided to dismiss the case.
Lopez said Friday that he had no easy answer for this case, but ruled that dismissal was the right call for the best interests of the creditors and the Free Speech Systems estate.
The Connecticut families and Free Speech Systems itself had argued for conversion that case, arguing that conversion would serve all the creditors’ interests equally and maximize how much money they would get.
Meanwhile, Jones and the Texas families supported dismissal, claiming that the creditors would get more money by leaving Free Speech Systems in operation. PQPR Holdings, a company with a separate case against Free Speech Systems, supported either plan so long as Lopez retained jurisdiction over their case.
The parties began to make their cases alongside testimony from J. Patrick Magill, the court-appointed Chief Restructuring Officer for Free Speech Systems, who the Connecticut plaintiffs called as their sole witness. Following that, the second round of testimony focused on Jones’ financial advisor, Robert Schleizer of Blackbriar Advisors, called by Jones.
Although the two main cases have concluded, two others remain in progress. PQPR is suing Free Speech Systems, in an adversary proceeding presided over by Lopez, to recover its own suite of debts. And the families from both states have another suit against Jones pending for hiding assets from creditors.
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