A federal bankruptcy judge heard arguments Monday on whether to approve or deny the sale of Alex Jones’ Infowars to satirical news outlet The Onion.
U.S. Bankruptcy Judge Christopher Lopez heard opening arguments and testimony from one witness on Monday regarding the auction process. Global Tetrahedron LLC, the company behind The Onion, with support from the Sandy Hook Elementary School shooting victims’ families in Connecticut, was designated the winning bidder for Jones’ Free Speech Systems and Infowars in a November auction. First United American Companies, which has business ties with Jones, was designated the backup bidder..
Jones’ company and its assets were auctioned off to help pay the $1.5 billion in damages he owes to the families of the 2012 Sandy Hook mass shooting victims, which killed 20 children and six adults. 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.’ His subsequent bankruptcy filing led to the auction.
Here’s what happened during the nearly six hour first day of the sale order hearing:
Opening arguments
Joshua Wolfshohl, attorney representing trustee Christopher Murray, opened his arguments Monday saying that the sale is supported by all Jones’ creditors and was done in accordance with the order to wind down Free Speech Systems and Infowars for auction.
“The trustee has a proposed sale that pays significantly more to unsecured creditors than any alternative,” Wolfshohl said in his opening arguments. “No creditors, this is important, no creditors of (Free Speech Systems) have objected to the sale.”
The Onion and the Connecticut families’ final bid amounted to $1.75 million in cash assets, accompanied by a distributable proceeds waiver. This waiver enables the families to forgo up to 100% of their entitlement to better serve unsecured creditors, depending on the amount of other bids. The bid also included a share of future revenue. Combined, the final bid value was estimated to be at least $7 million.
Representatives for Global Tetrahedron and the Connecticut families also presented opening statements, saying they followed the procedure laid out by the trustee, won the auction and are now experiencing significant delays and additional costs due to the ongoing motions and court hearings in the matter.
A limited objection was initially filed by Elon Musk’s social media site X, saying Infowars’ accounts were owned by X and could not be included in the sale.
Wolfshohl and Caroline Reckler, a representative for X Corp. who appeared in court Monday, said an agreement was reached outside of court where The Onion agreed to move the content on Infowars’ X accounts to new accounts, or take it down completely, rather than seek the purchase of the accounts themselves.
Ben Broocks, the attorney representing Jones, and Walter Cicack, representing the backup bidder First United American Companies, asked the judge to block the sale order, claiming Global Tetrahedron’s bid wasn’t the highest and best bid and that the auction process was riddled with fraud and collusion.
“The bid that was made and accepted, it wasn’t the highest and best,” Cicack said. “It was based on a contingency, and it was based on a formula.”
First United American Companies’ final bid was $3.5 million for rights to Infowars and Free Speech Systems, according to court filings.
First witness testimony
Jeff Tanenbaum, president of ThreeSixty Asset Advisors and an auctioneer with 40 years of experience, who served as a sales agent and auctioneer in the sale, testified for most of Monday afternoon.
Tanenbaum spoke about the sale order process, determining the highest bidder and deciding to switch the auction process from a live auction to one held online for the highest and best bid.
When asked by Broocks about the validity of Global Tetrahedron’s bid, Tanenbaum said it was not a lower bid being increased to surpass a competitor’s bid. Instead, it was a higher bid that could be adjusted to just above the backup bidder’s offer, unless the full amount was necessary based on the backup bid.
“I understood (Global Tetrahedron’s bid) as a $7 million bid,” Tanebaum said in response to cross examination from Broocks asking about the value of Global Tetrahedron’s bid. “That they were bidding $7 million. … I understood it to read that they were saying, ‘Here’s our bid of $7 million, but if somebody comes in lower than us, I want our bid to be just above it by $100,000’”
What to expect next
Court will reconvene at 1:30 p.m. Tuesday in Houston to hear additional testimony from witnesses, including trustee Murray, in the sale and closing arguments. Lopez could rule on the sale order as soon as Tuesday.
If approved, Infowars and Free Speech Systems will sell to The Onion. If denied, Lopez could call for a new auction or award the assets to the backup bidder, First United American Companies.
If awarded the assets, The Onion has said it wants to relaunch Infowars as a parody site with “less hateful disinformation” than before.
In the event The Onion wins approval to buy Infowars and likely kicks him out, Jones has set up another studio, websites and social media accounts. He’s previously said he would continue to use the Infowars platform if the auction winner allowed it.
Jones is currently appealing the $1.5 billion in damages he owes, citing free speech.
Last week, a Connecticut appeals court reduced the original judgement against Jones by $150 million, but upheld the rest of the award. Jones plans to continue appealing with the highest court. Jones is still appealing the $50 million Texas defamation judgement.
This article originally appeared on Austin American-Statesman: Sale of Alex Jones’ Infowars goes before judge