Free Speech Systems: Committee proposes competing plan for Alex Jones

By Sarah Lizee

Olympia, Wash., Nov. 27 – The official committee of unsecured creditors in the Chapter 11 case of Alex Jones has filed a Chapter 11 plan to rival the one proposed by Jones’ Free Speech Systems LLC company, according to documents filed Wednesday.

As background, Jones and his Free Speech Systems company filed separate Chapter 11 cases in 2022. Jones posted at least $1.5 billion in liabilities and was facing litigation on the brink of judgment at the time.

The committee said that since then Jones has not presented any viable path to emergence, nor has he done much of anything to preserve or maximize the value of his estate for the benefit of his creditors, which are predominantly families of Sandy Hook shooting victims.

Jones has yet to sell a single non-exempt asset, and, based on his monthly operating reports, has spent about $900,000 since starting the case, the committee noted.

“He has refused to adhere to a reasonable budget or engage with the committee on ways to limit spending, and he has resisted commencing meritorious avoidance actions against insiders,” the committee said.

“In short, Jones has failed in every way to serve as the fiduciary mandated by the bankruptcy code in exchange for the breathing spell he has enjoyed for almost a year. His time is up.”

Notably, the court recently held that most of the claims of the Sandy Hook families against Jones are not dischargeable. The court also urged the parties to move the Chapter 11 cases toward conclusion.

“Although the parties have been engaged in good faith (albeit intermittent) discussions regarding a path forward for much of the last year, no such resolution has been achieved,” the committee said.

The committee said it does not believe the plan proposed in the Free Speech Systems case will advance the Chapter 11 cases absent a global resolution involving both Jones and Free Speech Systems’ estates.

The committee said that through its plan, Jones could either implement an orderly liquidation, or obtain a consensual release from more than $1.5 billion in largely nondischargeable judgments in exchange for adherence to a 10-year, fixed-payment schedule that pays creditors at least $85 million in total, while preserving (in both scenarios) estate causes of action against third parties.

“The decision is his. But whatever alternative Jones chooses, the creditors’ plan provides a clear path out of the quagmire of these cases,” the committee said.

The plan being proposed in the Free Speech Systems case is a Chapter 11 subchapter V small business plan of reorganization. The plan purports to enjoin the Sandy Hook families from taking any action to prosecute or collect all or any portion of their claim against Jones so long as the plan in not in uncured default.

Austin, Tex.-based Free Speech Systems filed bankruptcy on July 29, 2022 under Chapter 11 case number 22-60043. Jones’ Chapter 11 case number is 22-33553.

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