HOUSTON, Texas (CN) — The bankruptcy case against conspiracy theorist Alex Jones had another tumultuous weekend, as a Texas judge approved a Sandy Hook victim's family attempt to collect on a $50 million defamation judgment against his company, prompting the trustee in Jones' case to ask the federal court to block the turnover in a late-night motion.
"The specter of a pell-mell seizure of FSS’s assets, including its cash, threatens to throw the business into chaos, potentially stopping it in its tracks, to the detriment of the interests of the chapter 7 estate for which the trustee is responsible," trustee Christopher Murray wrote.
Following the conversion of Jones’ bankruptcy case to a Chapter 7 liquidation case on June 14, U.S. Bankruptcy Judge Christopher Lopez appointed Murray as the Chapter 7 trustee, the person responsible for overseeing the liquidation of Jones’ personal assets.
As part of the the conversion process, Lopez placed an automatic stay against any seizures of Jones’ personal assets, including Jones’ personal stake in Free Speech Systems, which owns and operates InfoWars.
But the family of one of the Sandy Hook victims — who won the $50 million judgment against Jones and Free Speech Systems in January 2023 — filed a motion in Travis County District Court on Friday asking the judge to force Free Speech Systems to turn over its assets and to issue writ of garnishment against the company.
They argued in the state court filing that the dismissal of the Texas case against Free Speech Systems meant they could begin seizing its assets to start paying that judgment.
“Because Free Speech Systems is a business and not an individual, none of its property is considered exempt from collections,” the Texas family said in their filing. “Accordingly, there is no debate about which property of Free Speech Systems is exempt and all of it may be turned over.”
Travis County District Court Judge Maya Guerra Gamble granted the Texas family’s requests the same day.
In his Sunday night motion, Murray asked the federal court to block the Texas court order. Murray’s motion sought to extend that automatic stay to cover Free Speech Systems for 90 days, arguing that any seizure of Free Speech Systems assets would threaten its business operations, devalue Jones’ personal stake in the company and hinder the trustee’s efforts to liquidate Jones’ assets to pay the families.
“By filing the Turnover Application—which the state court has already entered an order granting—and the Garnishment Application,” Murray stated in the emergency motion, the Texas family’s requests in state court “threaten to create the very thing the automatic stay seeks to prevent, conflicting judgments from different courts and an imbalance between the Debtor’s creditors.”
The trustee’s latest emergency motion also publicly disclosed his plan to wind down InfoWars as part of the liquidation process.
The Texas creditors in the bankruptcy case against Jones are joined by Connecticut families, but the Connecticut creditors have since denounced the Friday motion for a turnover and announced their support for the trustee’s motion.
An attorney for the Connecticut families told the Associated Press on June 24 that “This is precisely the unfortunate situation the Connecticut families had hoped to avoid.”
No matter which way the process goes, the families will likely get just a fraction of what they are owed. Jones’ personal assets and Free Speech Systems’ assets would only account for about $16 million in total, according to testimony in the June 14 hearing. Jones has also appealed the two state court judgments, the aforementioned $50 million in Texas and the larger $1.4 billion judgment in Connecticut.
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