Infowars Receiver Offers Path to Clear Logjam on $1 Billion Debt

The appointment of a court receiver over Alex Jones’ Infowars media company offers a glimmer of hope for Sandy Hook Elementary School shooting victims’ families owed more than $1 billion after collection efforts sputtered for years in bankruptcy court.

A Texas state court’s Aug. 13 ruling named Gregory S. Milligan the receiver, allowing him to seize and sell assets of Free Speech Systems LLC, the parent company to Jones’ Infowars show. The development is a significant breakthrough for the families, who won financial judgments in 2022 related to Jones’ false claims that the 2012 massacre was a hoax.

Jones and Free Speech Systems avoided paying the judgments by filing for bankruptcy, which halted all litigation and debt collection efforts. But the receivership offers no such shield.

The receivership is a new opportunity to monetize the Infowars assets after the bankruptcy “went nowhere,” said Akerman LLP partner Michael D. Napoli, who’s served as a court-appointed receiver.

“It’s definitely a very good day for the Sandy Hook families,” Napoli said. “It’s a not good day for Jones.”

Bankruptcy to Receivership

The receivership comes after nearly three years of bankruptcy proceedings for Jones and Free Speech Systems that burned through legal fees and generated extensive litigation. The Sandy Hook families, meanwhile, received nothing from Jones.

Houston bankruptcy Judge Christopher M. Lopez late last year rejected attempts to sell Infowars’ assets to The Onion, the satirical news site, citing concerns about transparency in the auction process.

While Lopez dismissed Free Speech Systems’ bankruptcy proceeding last year, he vested Jones’ equity in the company to the Chapter 7 trustee in charge of running Jones’ personal bankruptcy estate. But the trustee, Christopher Murray, has said there’s been no interest in buying the equity, and Jones’ team said they can’t figure out how to sell the equity without a buyer taking on the company’s enormous debts.

That means Sandy Hook families are unlikely to see any recovery out of Free Speech Systems’ equity.

The bankruptcy court actions left Jones and the Sandy Hook family creditors in a complex holding pattern until last week, when Judge Maya Guerra Gamble of the Travis County District Court approved a request from some of the families to bring in a receiver.

Milligan has authority to request bank records, tax returns, cryptocurrency wallets, deeds, and corporate documents. He can also involve sheriffs or constables, change locks, seize property, and freeze bank accounts.

But Milligan must avoid stepping on the Chapter 7 trustee’s toes amid Jones’ personal bankruptcy. The receiver will have to be mindful of property under Jones’ personal Chapter 7 estate, including his homes, bank accounts, personal items such as guns and a cryogenic chamber, and any intangible assets.

Murray is seeking to auction Jones’ Austin rental home, his watches, and his Ford truck to generate funds.

A New Path

The receiver has substantial discretion and flexibility to pursue and control assets, said James W. Volberding, a Volberding Legal Group PLLC attorney who’s worked as a Texas receiver.

Milligan’s appointment is a “breakthrough” for the creditors because he can move immediately, even though both he and the trustee will likely face the same resistance to obtaining records from Jones and Free Speech Systems, Volberding said.

“Mr. Milligan is one of the most capable and experienced receivers in Texas and has a sterling legal team,” he said.

While the receivership order applies only to the Sandy Hook families who are owed $965 million on a judgment from the Connecticut state court against Jones and Free Speech Systems, those families previously struck a deal to share recoveries with others who won a separate, roughly $50 million judgment in Texas. That means the receivership could benefit both groups.

One practical difference between the receivership and trustee proceedings generally is the appellate courts, Volberding said. Texas state courts offer multiple ways to challenge rulings in the state appellate system, which can cause delays and inconsistent results, he said.

Buyers and Battles Ahead

The Onion CEO Ben Collins confirmed via email to Bloomberg Law and on social media the outlet is working on a potential new bid for the assets following its unsuccessful attempt last December.

Before Lopez rejected The Onion’s bid last year, it had planned to relaunch Infowars in conjunction with gun-safety group Everytown for Gun Safety, which is backed by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.

Jones told his viewers last week he has backup networks and studios ready if the receiver seizes his company. He declared the receivership “unlawful,” but also said that Infowars could be shut down by September “barring another miracle.”

“I will be an employee and the news director at a new network we’re going to launch and we will just move forward,” Jones said.

Free Speech filed a notice of appeal to the receivership order on Aug. 15, and it’s not clear yet whether that will throw another wrench into the collection process. Jones’ appeal of the $50 million Texas judgment received a favorable response from a Texas appeals court in May and he has asked the US Supreme Court to review the larger Connecticut judgment.

A trustee must answer to all creditors, but the receiver’s mandate for now is focused on recoveries for just the families holding the Connecticut state court judgment, giving them more sway than others.

“What they’re trying to do is break the bankruptcy court logjam where he’s tied them up with all these other things,” said Ed Boltz, a bankruptcy attorney in the Law Offices of John T. Orcutt. “The judge has grown frustrated with the whole circus aspect of this.”