Sign up for The Brief, our daily newsletter that keeps readers informed about Texas’ most essential news.
Alex Jones’ main company, Free Speech Systems, filed for bankruptcy on Friday, halfway through a two-week trial to determine how much damages the Texas-based conspiracy theorist will pay parents of a victim of the Sandy Hook shooting. The filing is not expected to disrupt the libel damages lawsuit unfolding in Austin, which is scheduled to resume Monday morning.
In the bankruptcy filing, released Saturday by the US statesman of Austin, Free Speech Systems filed a subchapter aimed at small businesses, which a Sandy Hook family lawyer says is a effort to avoid any oversight.
That attorney, Avi Moshenberg, told the Texas Tribune that the timing of the filing matters because he believes Jones hopes to file for bankruptcy as a small business, with limited debt, before the pending lawsuit is completed. The damages awarded would significantly increase the company’s debt and eliminate the possibility of filing for bankruptcy as a small business.
“There are all kinds of protections that are supposed to be designed for quick, quick bankruptcy without a lot of oversight — the kind of oversight you’d see in a normal bankruptcy — because it’s designed for small businesses,” Moshenberg said. He believes that Free Speech Systems hopes to take advantage of this lack of oversight.
“They obviously filed before the end of the trial because their debt is going to exceed the level that qualifies as a small business if they waited until after the trial,” Moshenberg said.
The company reported liabilities of $79 million, including $54 million of debt to a company called PQPR Holdings. Jones is listed as a director of this company. The Sandy Hook families suing Jones for defamation and emotional distress alleged, in a separate lawsuit, that this large debt to PQPR Holdings is a diversion to protect millions of dollars in assets.
Regardless of his company’s bankruptcy filing, Jones is in the midst of a two-week trial in Austin to determine how much he will compensate Scarlett Lewis and Neil Heslin, the parents of 2012 Sandy victim Jesse Lewis, 6. Hook shooting range in Newtown, Connecticut. Last October, an Austin judge ordered a default judgment against Jones for defamation after he called the school into shooting a prank, which led Jones’ auditors to harass the victims’ families.
Jones and his legal team have used bankruptcy filings before amid the litany of lawsuits suing him. In April, three other companies owned by Jones filed for bankruptcy, including one previously called InfoWars, which is the name of his show and website where he called the shooting a hoax.
This bankruptcy filing has delayed jury selection for the ongoing Lewis-Heslin trial. The plaintiffs decided to drop one of the bankrupt companies, InfoW fame, from the lawsuit to sue.
Following Friday’s bankruptcy filing, Jones’ attorney, F. Andino Reynal, filed an emergency motion to lift the bankruptcy code‘s automatic stay provision. The move will allow the current trail to continue unobstructed.
But the bankruptcy filing could impact two future trials scheduled for September in Austin and Connecticut, both of which will determine the amount of damages to be paid to Sandy Hook’s parents, Moshenberg said, though he hopes keep those hearing dates.
“One thing that shouldn’t be lost is that this company that does millions and millions and millions of dollars in business has filed for bankruptcy protection under the small business sections,” Moshenberg said.
Free Speech Systems filed under Subchapter Five of the bankruptcy code, which is reserved for small businesses, defined as having less than $7.5 million in debt, excluding money owed to affiliates or initiates.
Of Free Speech Systems’ $79 million in liabilities, Moshenberg said he suspected much of that debt was to insiders, like Jones, his parents and children, and would therefore be exempt from the total debts. to be considered a small business.
Reynal did not immediately respond to a request for comment on Saturday. The Austin American statesman reported that Reynal told Austin District Judge Maya Guerra Gamble that the filing was made now so that the extent of the damages from the ongoing lawsuit could be provided in bankruptcy court.
“It’s an Alex Jones stunt to try to avoid facing justice,” Moshenberg said. “The families of Sandy Hook will absolutely bring him to justice. This is our goal. It’s our mission and we’re just not going to back down until it happens.
When you join us at the Texas Tribune Festival September 22-24 in downtown Austin, you’ll hear from changemakers who drive innovation, lawmakers who support new policies, industry leaders who advance Texas and many others. Check out the growing list of speakers and purchase tickets.