Three companies owned by Austin-based conspiracy theorist Alex Jones have filed for bankruptcy, listing as creditors the parents of Sandy Hook Elementary students who have successfully sued him for defamation in Texas and Connecticut.
As part of the Chapter 11 bankruptcy, Jones paid $725,000 of his own money into a litigation settlement trust that now holds the assets of the three companies.
The trust is meant to pay damage awards to the Sandy Hook families, according to the bankruptcy papers filed Sunday and Monday in Victoria federal court.
Another $2 million will be paid into the trust at a future date, the filings said, without listing the source of the money.
Judges in Travis County and Connecticut have found Jones liable for defamation and emotional distress after he and his InfoWars media company described the 2012 school shooting — which left 20 students and six adults dead in Newtown, Conn. — as a hoax.
The judges found that Jones had damaged the parents’ cases by improperly withholding information and documents needed to press their claims. The next step will be trials to determine how much money Jones and his companies will have to pay in damages.
The first such trial is set to begin next week in Austin. Lawyers for the families were unsure Monday how the bankruptcy filing may affect that trial and a second one set for June in Austin.
Jones, Free Speech Systems and the three companies seeking bankruptcy protection have spent more than $10 million in legal fees and expenses on the Sandy Hook litigation, the bankruptcy filings said.
Companies file for bankruptcy
The bankruptcy case did not involve Free Speech Systems, which is fully owned by Jones and operates the InfoWars media company.
The companies seeking bankruptcy protection are:
• InfoW Inc, which owns copyrights and domain names related to Infowars.com.
• IWHealth, which owns the cash flow from royalties under an agreement with Youngevity, whose dietary supplements and other products are sold on the InfoWars website.
• Prison Planet TV, which owns copyrights and domain names related to prisonplanet.tv.
Jones assigned his 100% equity interest in all three companies to the litigation settlement trust before filing for bankruptcy, the court filings said.
InfoW and Prison Planet TV license intellectual property and domain names to Free Speech Systems, but the three companies do not produce or have control over the content of Infowars, according to the bankruptcy filing.
Parents relieve financial impropriety
Earlier this month, the parents of two children killed in the Sandy Hook shooting filed a separate lawsuit in state District Court in Travis County that claimed Jones tried to hide assets from them and the courts by fraudulently diverting millions of dollars to himself and to shell companies .
The lawsuit alleged that the illegal transfers included $18 million paid directly to Jones from 2018-21 — payments that were on top of an annual salary that exceeded $600,000 and that began the same year the parents sued Jones and his companies.
The lawsuit seeks a court order voiding the transfers as a violation of the Texas Uniform Fraudulent Transfer Act, which prohibits defendants from shielding assets from creditors.
The parents are also seeking a court-appointed receiver to take charge of the transferred assets and other properties owned by Jones and Free Speech Systems.
In the bankruptcy filing, lawyers for Jones asked US Bankruptcy Judge Christopher Lopez, who has courtrooms in Houston and Victoria, to approve two trustees to manage the litigation settlement trust and oversee the three companies in bankruptcy.
Both are former federal bankruptcy judges in Texas — Russell Nelms, who was on the bench from 2004-18, and Richard Schmidt, who served from 1987 to 2015.
The trustees are needed to put the companies “in the hands of two individuals well-versed in fiduciary law and with years of experience supervising debtors to maximize recoveries for creditors,” the bankruptcy filing said.
Hoax claims create ‘financial distress’
The three companies’ “financial distress” stems primarily from statements made by Jones and others on InfoWars that questioned the truth of the Sandy Hook school shooting, according to the bankruptcy papers.
The extent of that distress, however, has yet to be determined by the courts.
The first step in that process — next week’s Travis County trial to determine damages — involves Neil Heslin and Scarlett Lewis, parents of 6-year-old Jesse Lewis. They sued after Jones alleged that the school shooting was “a giant hoax” and disputed Heslin’s claim that he had held his dead son in his arms afterward.
The June trial involves Leonard Pozner and Veronique De La Rosa, parents of 6-year-old Noah Pozner, who sued after Jones described the school shooting as a “false flag” operation that was intended to create a pretext for federal limits on gun rights .
The litigation settlement trust created by Jones is intended to pay claims from those trials as well as similar, though as yet unscheduled, trials in Connecticut.
In addition, bankruptcy papers said the trust is intended to pay a claim by Marcel Fontaine, whom InfoWars mistakenly identified as a suspect in the 2018 shooting at a high school in Parkland, Fla.
A trial in the Fontaine case is set for September in Austin.