đ„Alex Jonesđ„
What a POS. Also: President Biden May Deliver Good News for Students
Weâre going to give (ourselves) a much-needed pep talk here.
The US-based chapter 11 bankruptcy system is, generally speaking, a great one. When used the right way, it is tremendously fair; it is commercial and practical; it provides a framework within which businesses that might otherwise go away for good can be resuscitated, preserving countless jobs and heaps of tax revenue. There is a societal good to our bankruptcy system â a system that is largely predicated upon the concept of equitable treatment of similarly situated creditors. The US system is the model for systems throughout the world; it is a system that other countries aspire to and copy time and time again.
Which is why it is such a complete and utter shame that many peopleâs understanding of our bankruptcy system derives from uses of our system that are, for lack of a better description, a bit unsavory.
Thatâs right, despite all of the good that our bankruptcy system does, the old school stigma that used to taint companies that descended into bankruptcy has now metastasized in such a way that it has seemingly engulfed the system at large.
That is because the bankruptcy cases that have generated the most amount of attention in recent years are those that arguably represent abuses of the system: countless Catholic dioceses, the Boy Scouts of America, Purdue Pharma, or the most recent egregious example, LTL Management (J&J). The industry needs a public relations firm because, from the outside looking in, it just looks like bankruptcy courts have become havens for cowardice and scumbaggery that squeezes the little guy who has already suffered so much â even if the reality is far more nuanced and complex than that (read: thereâs a good argument that it may, in a collective sense, actually be better for these claimants that these companies use the mechanisms baked into the bankruptcy code to address their claims). Still. Perception counts.
Enter Alex Jones. If youâre unfamiliar with this dripping piece of dung, then consider yourself lucky. But to simply skim the surface of what this dude is about, luckily John Oliver is here to enlighten you:
Nothing says âcowardice and scumbaggeryâ more than this complete and utter piece of sh*t. This is a man who has spent the last several years leveraging his godforsaken media company to â âĄïžwait for itâĄïž â claim time and time again that the 2012 shooting at Sandy Hook Elementary School was a âfalse flagâ hoax. To refresh your recollection of those events, 20 children and six educators were killed during that tragedy. Twenty. Children. And. Six. Educators. F*ck you, Alex Jones.
On Sunday April 17, 2022, three companies (formerly) owned by Mr. Jones â InfoW LLC, IWHealth LLC and Prison Planet TV LLC (collectively, the âdebtorsâ) â filed for chapter 11 bankruptcy under SubChapter V in the Southern District of Texas (Judge Lopez).* Each of these entities are holding companies for IP assets: they are NOT the entities that control the content thatâs been spewed over the years on Mr. Jonesâ devilâs spawn, InfoWars.
More specifically, InfoW owns copyrights/domains related to âInfowars.com.â IWHealth owns cash flow from royalties and/or an agreement from Youngevity, a company that sells vitamins and mineral supplements affiliated with Mr. Jones. And Prison Planet TV owns copyrights/domains related to prisonplanet.tv (lol). Infowars itself â âa conspiracy-oriented website and media companyâ (LOL â this is the debtorsâ own languageâŠyou mean itâs not legit news? Color us shocked!) â is operated by non-debtor Free Speech Systems LLC (âFSSâ). InfoW and Prison Planet TV license their IP and domain names to FSS but, according to the debtors, they have, as indicated above, no control over InfoWarsâ content.
Alex Jones owns 100% of non-debtor FSS. He also owned (operative past tense) 100% of the equity of each of the three debtors but he conveniently assigned those equity interests before the bankruptcy filing to whatâs been dubbed the â2022 Litigation Settlement Trust.â Thatâs right yâall: we have yet another example of a debtor utilizing the âgood co/bad coâ structure to rid itself of burdensome litigation. This maneuver would have been wholly predictable if we actually gave enough a sh*t about Alex Jones to make predictions about him. Spoiler alert: we donât. The jerk forced us to give a sh*t by filing the debtors for BK and falling within our coverage universe. Sigh.
To understand the logic behind him filing for bankruptcy, one must understand that heâs been spending the last several years getting sued into oblivion âŹïž:
Consequently, in the run-up to this bankruptcy filing, Mr. Jones allegedly has been performing all sorts of legal gymnastics in an effort to protect his net worth. This is from a complaint filed on April 6, 2022 in Texas by Sandy Hook plaintiffs against Mr. Jones in which the plaintiffs humorously allege that ââŠthe Jones Debtors doomsday prepped for ⊠judgments by diverting assetsâ:
After Alex Jones was sued for claiming the massacre at Sandy Hook Elementary was a hoax, the infamous conspiracy theorist conspired to divert his assets to shell companies owned by insiders like his parents, his children, and himself. Since being sued, Jones transferred millions of dollars from his fortune to these insidersâwhom he apparently thought were beyond reach. But the Texas Uniform Fraudulent Transfer Act prohibits defendants from playing shell games to shield assets from their creditors. And it allows creditors like the Sandy Hook Families to void fraudulent transfers that defendants like Alex Jones make to their insiders. The Sandy Hook Families and Fontaine therefore assert TUFTA claims against Jones and his insiders to foil this scheme.
The plaintiffs allege that starting in 2018 â when the relatives of the Sandy Hook victims began suing Jones and other employees of FSS in Texas and Connecticut for defamation and intentional infliction of emotional distress â to 2021, Jones personally drew $18mm from FSS in addition to his $600k+ annual salary â all taken while FSS operated at a net loss in the millions in each of those years.**
And so itâs awfully quaint that this POS is now b*tching that heâs spent more than $10mm in legal fees and expenses. Itâs even better that he literally launched an emergency blowout sale of his bullsh*t product on his website immediately after filing for bankruptcy. Grifters always be grifting. Perhaps he never should have started bloviating about sh*t he knew nothing about.đ€·ââïž
Anyway, that money hasnât been particularly well spent. Per the debtors:
Despite the substantial amount spent, both the Texas and Connecticut courts have imposed multiple sanctions and ruled that Jones, FSS, and the Debtors failed to comply with discovery requirements such that judgment on liability has been entered against them by default.[] No court has yet to quantify the amount of the damages.
A damages case was set to go to trial in Texas next week. Connecticut is months out. And so this POS indicates that the bankruptcy case is meant to avoid a âclassic race to the courthouseâ that benefits Texas claimants to the detriment of Connecticut claimants.
LOL. Is Mr. Jones really trying to spin the whole âsystem of equityâ concept in his own favor? This ahole has the audacity to act like heâs filing the entities for bankruptcy to ensure that the Connecticut Sandy Hook Plaintiffs donât get caught holding the bagâŠ? Spare us. The debtors note:
Given the limited cash on hand available to the Debtors, Jones, and FSS, there is a substantial likelihood that efforts to collect on a judgment of the Texas actions would result in leaving nothing left for the Connecticut Sandy Hook Plaintiffs or other creditors. Indeed, prior to even liquidating their claims, the Texas plaintiffs sought execution by initiating the TUFTA litigation.
âLimited cash on hand available,â huh? Wonder why that might be. đ€
So this is where the 2022 Litigation Settlement Trust comes in. The debtors, Jones and FSS set it up to provide a mechanism for payment of the litigation claims. Where would that payment come from? Well, naturally, thereâs a funding agreement! That agreement breaks down as follows:
Initial funding of $725k by Mr. Jones to cover the costs of administration of the bankruptcy and the litigation settlement trust. In other words, the initial funding amount will cover the cost of bankruptcy pros, i.e., the law firm, the Chief Restructuring Officer, etc., and the two retired judges who are proposed to serve as trustees of the 2022 Litigation Settlement Trust at $900/hour (nice work if you can get: retirement off the bench never looked so good!).
Confirmation funding of $2mm.
Post-confirmation funding of $250k/quarter for 20 consecutive quarters.
The funding agreement is valid for ânot less than 5 years from the Plan Effective Date.â

No doubt there will be a lot of people who donât think $7mm will cut it.

But there may not be much they can do about it.
The first hearing in the case is scheduled for April 22 at 9am CT.
Stay tuned.
*The use of SubChapter V is interesting: this ploy would leave a meaningful amount of control in the debtorsâ hands and limit the amount of influence that claimants might have. To add insult to injury, the motion to approve the two proposed trustees of the 2022 FSS Litigation Settlement Trust would appear to further dampen the influence of the SubChapter V trustee.
**Apparently Mr. Jonesâ supplements business does gangbusters business. Here was one take, however, on the quality of those products:
đ„Student Loans in America = a Hot Mess. Part II.đ„
We wrote about students loans and bankruptcy late last year. Long story short: it's really, really difficult to get your student loans discharged in a personal bankruptcy proceeding. Calls by Democrats to adjust the Bankruptcy Code and make it easier to discharge have fallen on deaf ears thus far in Congress. The administration has still not "ruled out" large scale debt cancellation* but it doesn't seem likely in the near term â though perhaps President Biden is just saving up some goodwill as midterm elections approach in November. That said, Biden isnât just sitting around (in his basement, lol) doing nothing about the issue.
First, he recently kicked the can further down the road for student borrowers by extending a former-President-Trump-initiated (via executive order and later folded into the CARES Act)** loan payment pause on federal student loans for another four months â a policy that is polling very popular.*** This, coupled with the CFPB's recent commitment to heightened scrutiny of private loan student companies' debt collection promises, spells some short-term hope for student debtors.
Second, thatâs not the only relief for student debt holders coming out of the Biden administration. Per The Wall Street Journal:
The more than seven million borrowers with defaulted federal loans will get the default removed from their credit report and be given a second chance to get back on track making payments, the Education Department said.
The change will improve the financial prospects of these borrowers, as a default significantly hurts peopleâs chances of getting auto loans, mortgages and credit cards. It may also limit oneâs ability to get a job, rent an apartment or enlist in the U.S. Armed Forces.
And, third, the US Department of Education announced on Tuesday that ââŠit will grant federal student loan borrowers additional credit toward loan forgiveness under what is known as income-driven repayment plans. The move will bring more than 3.6 million people closer to debt cancellation, including 40,000 who will be immediately eligible, according to the department.â Per The Washington Post:
About half of the more than $1 trillion in outstanding student loans made directly by the federal government is being repaid through one of the four income-driven plans. The plans cap monthly payments at a given percentage of earnings, with the promise that the balance will be forgiven after 20 or 25 years of payments.
While these policies are a positive development for a lot of students, the Biden administration isnât entirely playing ball here. In fact, the Biden administration is sending conflicting messages: at the same time it's pushing for extensions in the repayment pause and moving potentially tens of thousands of students closer to debt cancellation, Biden's DOJ has continued to contest â despite a 2021 commitment to reconsider its stance â the rare bankruptcy court judgements that have granted student loan debtors relief from their loans.
So, what'll happen with student loans later this year? đ€·ââïž
Johnny sure isnât paying until that pause is up, though. The question is: given all of the deferrals and all of the talk of cancellation, will he even pay it once it is? đ€
*There are many politicians â Senator Elizabeth Warren the most vocal among them â who believe that President Biden can eliminate student debt via executive order under power conferred upon him by a 1965 law called The Higher Education Act, which governs federal student loan debt. Itâs not so clear cut, however, and if he were to do it, the act would no doubt be the subject of litigation.
**Interestingly, President Trump and Congress also set the interest rate on the federal loans to 0% to ensure that interest didnât rack up during the forbearance.
***This latest extension was President Bidenâs fourth extension and, combined with former President Trumpâs efforts, the seventh total. In total, students have gotten a reprieve for two years at 0% interest â a policy that costs the US federal government $5b a month. Thatâs not a typo, thatâs most definitely a âbâ for âbillion.â Due to this, two student loan servicers, Navient Corp. ($NAVI) and Granite State, quit working for the federal government: too much uncertainty and complexity and too little money. This has, in part, contributed to the administrationâs deferrals: the logistics arenât in place for student loan servicing to re-commence!
đResourcesđ
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Using litigation to silence the critics of society, regardless of yours or my views on those critics, is the most anti-democratic thing around. His theory of Sandy Hook might be 'out there' but shutting him down due to it? That's even more 'out there'.
Shove your cancel culture where it hurts (btw I'm no fan of Alex myself)