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Infowars’ Parent Pitches New Top Adviser to Lead Bankruptcy Case

Oct. 4, 2022, 5:00 PM

Infowars’ parent company has proposed a new chief restructuring officer to lead its bankruptcy, seeking to overcome a setback incurred by a judge’s rejection of its prior pick for the role.

Free Speech Systems LLC, controlled by far right-wing conspiracist Alex Jones, on Monday asked a Texas bankruptcy court for approval to hire CPA J. Patrick Magill and his firm, Magill PC, as its new CRO at a cost of $50,000 a month, according to a court filing.

The request comes after Judge Christopher M. Lopez last month rejected a motion by Free Speech to employ the previously named CRO because of failures to disclose prior connections to other entities founded by Jones.

Magill’s responsibilities would include controlling Free Speech’s daily operations, and control of interactions with creditors, Jones, vendors, and Free Speech’s purported secured lender, PQPR Holdings Limited LLC, according to the emergency application.

Jones will continue to produce his Infowars show and market products on it, the company said.

“This Court’s approval of the retention of the CRO and Firm by the Debtor is critical and indispensable to assuring that the chapter 11 process begins smoothly, and, that the Debtor has the optimal managers to help formulate a sound business and reorganization plan quickly,” Free Speech said. “Without the CRO and Firm, the Debtor cannot survive in chapter 11.”

Free Speech Systems in July filed for protection under the small business bankruptcy statute of Chapter 11 after Sandy Hook Elementary School shooting victim families won judgments against Jones and his website for falsely claiming the massacre was a hoax.

Since the bankruptcy filing, Sandy Hook victim families have won nearly $50 million in damages from Jones and Free Speech in a Texas court trial. A second damages trial involving Sandy Hook victim families is ongoing in Connecticut.

In September, the bankruptcy suffered a major setback after Lopez sided with the Justice Department’s bankruptcy watchdog and rejected Free Speech’s request to employ W. Marc Schwartz as its chief restructuring officer.

The judge also rejected a motion to hire attorney Kyung Lee or his firm, Shannon & Lee LLP, as the company’s bankruptcy co-counsel.

Lee and Schwartz had been working for the debtor for months. Lopez found they failed to disclose to the court that their work overlapped with other three Jones-affiliated companies during a different bankruptcy.

Lopez has directed the case’s bankruptcy trustee to examine Free Speech’s financial affairs, operations and insider relationships. The examination comes following creditors’ complaints that the company is using intricate corporate structures to hide assets that could be used to pay claims.

The case is In re Free Speech Systems LLC, Bankr. S.D. Tex., No. 4:22-60043, motion 10/3/22.

To contact the reporter on this story: James Nani in New York at jnani@bloombergindustry.com

To contact the editors responsible for this story: Maria Chutchian at mchutchian@bloombergindustry.com; Roger Yu at ryu@bloomberglaw.com