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Bidders are back in court battling over the auction of Alex Jones' Infowars
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The fate of conspiracy theorist Alex Jones' Infowars show could be decided as soon as Tuesday, as a federal bankruptcy judge continues to hear arguments for and against selling the show and its parent company to The Onion.
Jones says last month's auction of his company was a "mockery" and "rigged" in favor of the satirical news site that was named the winning bidder. The losing bidder, First United American Companies, a firm with business ties to Jones, wants the judge to disqualify The Onion's offer and name it the winner instead.
The Onion and the U.S. bankruptcy trustee who oversaw the auction, Christopher Murray, call those allegations "disingenuous and selfish," and nothing more than the "losing bidder's last-ditch effort to invalidate a fair and value-maximizing sale process." Murray is scheduled to testify Tuesday about the process.
At Monday's hearing in Houston, the head of the company hired to run the auction testified that The Onion offer was considered multiple ways. "Even if you push this thing as hard as one could push it, it still represents a higher bid than the alternative bid," said Jeff Tanenbaum, president of ThreeSixty Asset Advisors. On cross examination, Jones' attorney Ben Broocks pelted Tanenbaum with questions on whether The Onion's bid should have been considered an offer containing an improper contingency.
"There's a lot of ways you could define contingency, so we'll just have to disagree," Tanenbaum replied. "That's not what was intended here."
At stake is whether Jones will be able to stay in his studio and continue his brand of conspiracy mongering with his existing audience and under his long-established Infowars name, or whether he will be forced out to rebuild his brand and audience elsewhere while The Onion turns Infowars into a satire of itself.
This is "a giant conspiracy to violate my rights and your rights to be able to hear what you wanna hear or watch what you want to watch." Jones said Monday on Infowars. If he is kicked out of the Infowars studio, he said he'll move to his back-up studios and website, AlexJones.Network, and will continue posting a live feed on his usual satellites and stations and on X.com.
Jones was also contesting the sale of the rights to his X accounts, emails, domain names and other intellectual property. In court Monday, the trustee and X announced a deal affirming that "Infowars Accounts are not property of the Jones Chapter 7 estate or the FSS estate" and therefore cannot be transferred or sold without X's consent. But a confirmed buyer would acquire the content from Infowars' X accounts, and that content would then be taken offline. The trustee could — with the buyer's permission — shut down the Infowars account. However, the deal, which still requires the judge's approval, is unclear on what would then happen to the Infowars username.
The sale of FSS is the culmination of two defamation suits brought by families whose loved ones were among the 26 children and educators murdered in the 2012 Sandy Hook School shooting in Newtown, Conn. They said Jones' continuous spewing of false conspiracy theories that the shooting never happened prompted his followers to harass and threaten them for years.
Juries in Connecticut and Texas awarded the families a total of nearly $1.5 billion in damages; a Connecticut appeals court last week upheld the bulk of the damages on appeal, but struck down $150 million from one specific claim that the court deemed legally flawed. That leaves the total Jones now owes the families at nearly $1.3 billion.
Allegations of a 'fatally flawed' process
The losing bidder, FUAC, bid $3.5 million in cash. The Onion offered half that amount in cash but added a sweetener: The Connecticut families would voluntarily turn over enough of their proceeds from the sale to boost the payout for other creditors enough to beat any other offer. According to the trustee, that arrangement could yield those other creditors up to twice as much as FUAC's offer.
Jones and FUAC cried foul, accusing the trustee of colluding with The Onion and the Connecticut families to ensure they would win.
FUAC attorney Walter Cicack argued in court Monday that the trustee improperly allowed The Onion and the Connecticut families to change their bids after the auction to better comply with the rules and to enhance the value of their offer, while no such opportunity was given to FUAC. He has also argued that the trustee succumbed to "pressure tactics" from the Connecticut families who only wanted to buy Infowars in order to bury it and punish Jones. The trustee, Cisack contends, violated his own rules by replacing a plan for live bidding with a call for "best and final" sealed offers, and by allowing the families' sweetener, which he says amounts to a "contingency" offer and a "floating bid" which aren't allowed under the rules.
"The sale process was fatally flawed in its execution," FUAC argued in court papers filed in advance of the hearing. "It was behind closed doors, cloaked in secrecy" and the sweetener "provides no actual value" because the families haven't yet collected a penny of it and Jones is still appealing the damages.
University of Florida Levin College of Law professor Christopher Hampson says Tanenbaum, the auctioneer, may have "dispelled the more conspiratorial allegations about the auction process." But the two sides remain sharply divided on whether The Onion bid as structured should have been allowed.
'A desperate attempt to manufacture controversy'
The judge rejected an 11th-hour emergency motion from the trustee to disqualify Jones' arguments because, among other things, they came in after a court deadline and because, the trustee says, Jones did not qualify as one of the parties entitled to weigh in.
Jones is "trying to thwart a sale that is the best interest of the creditors," Murray argued in the filing. The "best and final offer" is a "customary strategy" that maximizes value to creditors, and no one objected until they found out they didn't win," Murray noted. He dismissed the objections as "a desperate attempt to manufacture controversy."
The Onion agreed the challenges were just an attempt to "distract and delay" the sale. The media company denied any wrongdoing or inequity in the process, and said the judge has broad discretion to do what he thinks is best for creditors.
"Despite all the noise, the court need only address a simple question that is whether the Trustee exercised his reasonable business judgement," argued lawyers for Global Tetrahedron, The Onion's parent company.
For their part, the Connecticut families are also asking the judge to confirm the sale. Despite FUAC's objections to what they claim is an unprecedented deal structure, the families' lawyers say what would be "truly unprecedented" would be for the court to "supplant the business judgement of the Trustee and deny the sale when not a single creditor opposes [it]."
Notably, Monday's arguments coincide with what can be the most difficult time of year for these families, just days away from Dec. 14, the day their children were brutally shot and killed at the Sandy Hook school.
Almost exactly 12 years after that tragedy, the sale may bring at least a small measure of satisfaction. The Connecticut families have long said they are less interested in any financial windfall from an Infowars bankruptcy, than they are in, as their lawyer put it, "true accountability," which would mean "an end to Jones' ability to spread lies, pain and fear at scale."
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