Federal judge denies Sandy Hook families' settlement in Alex Jones bankruptcy
AUSTIN, Texas — A federal bankruptcy judge overseeing the case of conspiracy theorist Alex Jones rejected a proposed settlement from the families of the Sandy Hook Elementary School shooting victims.
The decision complicates a proposed sale of Jones' Infowars platform and could spur divisions between families who sued Jones and won nearly $1.3 billion in Connecticut court cases and those who won $50 million in Texas courts. The proposed settlement had aimed to address how the families would split $16 million in liquidated assets.
In the proposed settlement, the families who sued Jones in Texas would have received $4 million and the right to collect 25% of any distributions exceeding $12 million going to the families who sued Jones in Connecticut. The settlement could have allowed some families who sued in Texas to collectively receive up to $480 million from Infowars' parent company, Free Speech Systems.
Jones said the settlement was an effort to dismiss his appeals.
U.S. Bankruptcy Court Judge Christopher Lopez of the Southern District of Texas stated in a Wednesday hearing that the families and Chapter 7 trustee Christopher Murray could either try to resolve issues in state court or return with another settlement proposal.
The denial is the next step in Jones' ongoing bankruptcy case, which initially resulted in Free Speech System and its assets being auctioned off to help pay the nearly $1.4 billion in damages he owes to the families of the victims of the Sandy Hook Elementary School mass shooting in Connecticut. Twenty children and six staff members were killed in the attack.
Chris Mattei, an attorney for the Connecticut families, said in a statement Wednesday that "whatever steps the families take next, their determination to enforce every penny of judgments against Alex Jones will not change."
Judge: 'I'm not allowing a sale of the assets anymore'
Jones was found guilty of defamation by judges in Texas and Connecticut after using his platform to spread misinformation that the shooting was a hoax and claiming the families were "paid crisis actors."
Lopez gave the order for the auction in September. Murray named a joint bid between satirical news outlet The Onion and the Connecticut families as auction winners in November. First United American Companies, which has business ties with Jones, was designated the backup bidder.
In December, Lopez blocked that joint bid, saying the auction process was unfair, lacked transparency and the joint bid was questionable. Since then, First United American Companies has more than doubled its original $3.5 million offer to purchase Infowars' assets.
Lopez told Murray on Wednesday that he's no longer authorized to sell Infowars' assets and vacated the September order that detailed terms of the auction. Murray and the families had tried to use the order as justification to open claims against Free Speech Systems, which Lopez said could not be done as the order had already served its intended purpose.
Murray is now only authorized to sell Infowars' equity.
"I'm not allowing a sale of the assets anymore, pure sale of the equity," Lopez said. "This case keeps taking twists and turns and trying to come up with really masterful, creative lawyering. But at its core, it's something I can't approve. I'm really trying to do what I think is my duty and my job upon careful analysis of the law. And so, I'm not approving. I cannot."
Lopez also said since Free Speech Systems' bankruptcy case was dismissed last year, disputes with the company cannot take place in his courtroom and should be pursued in state court.
Lopez has said previously that he wants the more than 2½-year-long case to be wrapped up in 2025, but it remains to be seen what will happen to Infowars' equity.
Contributing: Reuters