InfoWars, Rival Creditors & Moral Judgment

The United States Constitution (at Article I, Sec. 8, Clause 4) provides for the ability to file bankruptcy. This is an imprimatur from the very beginning of our Republic, that the bankruptcy process is not a moral judgment. Rather it is an economic strategy. This can lead, sometimes, to odd results.

This was recently brought into full relief in the case of Alex Jones and Infowars, which have filed bankruptcy in Houston, TX. One group of creditors in Connecticut, have over $1.4 billion in judgments against Jones and Infowars for their defamatory conduct after the massacre at Sandy Hook Elementary School in 2012. This debt was not discharged (canceled) by the bankruptcies. A group of these creditors wants Jones’s companies shut down, to stop his dissemination of misinformation.

Mr. Jones, seeing that his company, Infowars, allegedly could not pay off judgments in bankruptcy, sought and received permission to begin selling off his personal assets to pay off the judgment against Infowars. Mr. Jones, acting on the principle that the debt, and not moral judgment, is in play, seeks to satisfy the judgment (or some portion of it), while technically being free to remain in business.

Another group of creditors, however, argues that keeping the businesses open (InforWars and the parent company, Free Speech Systems) allows greater return, because as long as the companies are generating revenue, the better position they will be in to pay off judgments.

Recently, one of the Sandy Hook parents filed a motion in a Texas State Court to seize control of all of Free Speech Systems' assets, which could pull the rug out from under the Bankruptcy Court and US Trustee, and deny the Bankruptcy Court control over assets to distribute. As a result, the US Trustee in the Alex Jones bankruptcy has sought an emergency stay,? to maintain the status quo, and prevent the the immediate liquidation or transfer of assets.

Ultimately, there may have to be appeals to the US Fifth Circuit Court of Appeals, the Texas Supreme Court, and remand to the Bankruptcy Court to sort all of the matters out. But, in the end, Mr. Jones will likely lose at least a portion of his misinformation empire.?But the closing will be in the interest of paying debts, and not directly a moral judgment on Mr. Jones.

COMMENTARY ON A MATTER OF PUBLIC INTEREST, AND NOT LEGAL ADVICE

THIS POST DOES NOT CONSTITUTE LEGAL ADVICE