Judge blocks bankruptcy sale of Infowars

Judge Christopher Lopez with the U.S. Bankruptcy Court in Houston said on Wednesday that Jones and the Sandy Hook families needed "finality of the bankruptcy process," the Wall Street Journal reported. Lopez said that the families could continue their legal battle against Free Speech Systems, Jones’ company that is the parent company of Infowars, in state court, which is "where they started in the first place."

Lopez said, "FSS, that estate is closed, …which means that [if] someone has a contract dispute with FSS, you don’t come to me." The outlet said the move is a victory for Jones, who has been fighting to delay the selling of assets of Free Speech Systems.

In December, Lopez rejected the sale of Infowars to Global Tetrahedron, which owns the satirical news website The Onion, saying at the time that the liquidation trustee who had been charged with auctioning off the Free Speech Systems assets did not maximize value for creditors.

Christopher Murray, the trustee, had been negotiating with the parties for next steps, which would have included another auction round in bankruptcy court. In January, the trustee’s lawyer said that First United American Companies, a business entity associated with Jones’s online shop, had submitted a new bid, doubling its previous $3.5 million offer. The lawyer said that the trustee had also expected a new bit from the Onion’s owner.

Jones was ordered to pay around $1 billion to the families of the Sandy Hook school shooting victims who sued him in Connecticut, and around $50 million to families who sued him in Texas.

Lopez said on Wednesday that he would not allow a new bankruptcy auction because he no longer trusts the process after the failed December attempt. The Wall Street Journal reported, "He said the trustee’s proposed settlement between the Connecticut and Texas groups would extend control of FSS’s assets—such as the rights to appeal the judgment—beyond the bankruptcy court’s authority."

The failed settlement would have seen the Texas group of families receive $4 million first, with the Connecticut families receiving up to $12 million next. After that, the Texas group would receive 25 percent of any additional funds and once paid, the Texas group would no longer be parties in Jones’ Chapter 7 bankruptcy case.