[ad_1]
(Photo by Olivier DOULIERY / AFP) (Photo by OLIVIER DOULIERY/AFP via Getty Images)
Yesterday, a jury in Connecticut clobbered Alex Jones and his company Free Speech Systems with a $965 million bill for compensatory damages in the second Sandy Hook defamation suit. That number could cross the $1 billion mark once punitive damages and attorneys fees are added in.
Naturally Jones greeted the news in the most Alex Jones way possible: he performed his troll schtick and begged his listeners for cash.
“Ain’t gonna be happening, ain’t no money,” he said bitterly as the verdict was read out. “Now remember, I’m in bankruptcy, we’ve got two years of appeals, the money you donate does not go to these people, it goes to fight this fraud, and it goes to stabilize the company.”
REALLY?
Because FSS spent the past three months telling a bankruptcy court that it needs to maximize profits to pay off its creditors, of which the Sandy Hook Plaintiffs just became far and away the largest. Of course FSS claims the creditor first in line to get paid is its supplement supply company PQPR Holdings Limited LLC, which “remembered” in 2021 that it had failed to invoice FSS for beet tincture and other pharmacological concoctions for years on end. Right around the time Jones and FSS got themselves default judgments in the Sandy Hook Suits, FSS executed a couple of promissory notes in favor of PQPR, securitizing the “debt” and prioritizing PQPR over other creditors. The fact that Jones and his parents happen to own PQPR through a series of Nevada LLCs is … purely coincidental.
Months ago, the Texas Plaintiffs filed suit under the Texas Uniform Fraudulent Transfer Act (TUFTA), alleging that the PQPR notes were a sham and that Jones improperly transferred tens of millions of dollars out of the company in preparation for litigation and bankruptcy. And indeed FSS’s corporate representative Brittany Paz testified that Jones pocketed millions of dollars of cryptocurrency solicited through the Infowars website.
The PQPR notes and the transfers have become a topic of heated debate in the bankruptcy filing. The Sandy Hook plaintiffs moved to deny the notes and put FSS under the control of a Tort Claimant’s Committee. That motion is currently tabled pending mediation, but US Bankruptcy Judge Christopher Lopez has shown some skepticism about the promissory notes, and even took the unusual step of disqualifying FSS’s original lawyers and proposed restructuring officer for several reasons, including their willingness to ratify the PQPR debt without conducting any due diligence. The court also instructed the US Trustee to investigate FSS’s books, resulting in subpoenas to PQPR and FSS asking a lot of pointed questions they clearly do not want to answer
In the meantime, Jones and PQPR — which are functionally the same entity — are playing hardball with FSS now that Jones doesn’t have full control of the company any more. On Tuesday PQPR’s counsel Stephen Lemmon huffily notified the court that the company is going to stop shipping product to FSS in ten days.
“PQPR is a creditor secured by a perfected lien on virtually all assets of the Debtor, together with proceeds,” he argued, insisting that PQPR had “made many concessions” and tut-tutting that FSS “has not been able to comply with the budget.”
“PQPR is ceasing ordering new product for the Debtor to sell, since the Debtor cannot say how it can repay PQPR,” Lemmon concluded ruefully, sniffing that “there must be some semblance of a credible budget, and meaningful controls built into any cash collateral order.”
In the meantime, Jones is making threatening noises about his right to be indemnified by FSS for any litigation costs, most particularly that billion dollars he owes to the Sandy Hook plaintiffs in Connecticut and Texas. Clearly he intends to pocket all of the company’s assets while shielding himself from personal liability, and if he has to blow up FSS and go start over, he doesn’t really care.
Any minute now Ed Norton is going to shoot Brad Pitt and all the buildings will fall down destroying all the creditors. Or perhaps not, if Judge Lopez tosses out the PQPR notes and rules that FSS doesn’t have to indemnify Jones.
Clearly there’s not a billion dollars to satisfy the current tally between the Texas and Connecticut plaintiffs. A forensic expert testified at trial that the company may be worth as much $270 million, or as little as zero without its star pitchman. And whatever happens when the inevitable appeals are concluded, the amount the Sandy Hook plaintiffs can recover is going to rest chiefly on the outcome of this bankruptcy.
No pressure, Judge Lopez!
FSS Bankruptcy Docket [via Court Listener]
Liz Dye lives in Baltimore where she writes about law and politics.
[ad_2]
