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Comment by pclmulqdq | Hacker News Reader

This is probably the correct decision. Alex Jones's vitamin company offered 2x more cash, and in the case of a bankruptcy, cash completely trumps any notion of "giving up debt." Especially when the debt being settled is astronomically large and you are giving up a very small portion of it ($7 million out of $1.5 billion). The other creditors are far better off getting more cash, and those $7 million of claims are worth way less than one cent per dollar.

Additionally, the auction here was run farcically, and basically seemed designed to create an outcome where the onion gets to buy this website for no money.

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Isn't it a little strange, though, that the system notionally decided that the families are owed an enormous amount of economic power as compensation for the nasty behavior of Alex Jones' media company, but at the same time it's obliging them not to use that economic power to prevent the sale of the media company to a "new owner" still affiliated with an unrepentant Alex Jones, who will undoubtedly continue the nasty behavior? Just in order to get cash to compensate them at pennies on the dollar for his previous round of nasty behavior?

I have to say, just as a matter of gut instinct, it sure feels like when the court finds that Alex Jones damaged people—at a value orders of magnitude beyond that of his company—those people should be allowed to decide that, to them, there's value in snuffing out his ill-behaving company altogether.

Is the issue that there are other creditors who are unhappy with this, who would get paid before the aggrieved families' damages would? The lawyers seem to be fine with it, as they're the ones advocating for this plan...

Selling to a business involved with the individual that lost in court.. It seems like a Fraudulent Conveyance to my non lawyer self (but I could be wrong)

https://en.m.wikipedia.org/wiki/Fraudulent_conveyance

The fraudulent conveyance may have been the move of the vitamin company itself, but the purchase in bankruptcy wouldn't be a fraudulent transation.

Letting Jones buy back his 'bankrupt' assets using money he fraudulently hid goes against the spirit of the law, even in the purchasing phase.

This guy should be living in his parents basement and barred from publishing on any significant media platforms. He's proven willing to exploit victims for personal gain to the tune of the millions of dollars.

Why? The creditors still get paid regardless.

Why should Jones be stopped from hiding assets from bankruptcy?

Or why should he be prohibited from profiting from exploitation of crime victims via broadcast platforms?

Regardless of whether victims get paid money, they were harmed emotionally by Jones's outsourced harassment. They don't need money. They need justice in the form of peace from harassment. And Jones seems set on exploiting them and the courts for his own enrichment.

Very odd that the judge didn’t write his or her reasoning in his ruling..

It's not a good outcome, but it's also not fraudulent conveyance. Principally because the proceeds of the sale go to the victims.

They go to the creditors including his primary sponsor. This is not a bad outcome it's the only correct legal outcome.

What you are saying is we should allow a creditor (of many) to sell an asset to whoever they choose at a lower market rate because it's the right political move in this one case. Why wouldn't those rules be applied in other cases.. you can sell any asset for a dollar to yourself and the bankrupt person will still be on the hook for the total debt minus a dollar. Letting a single creditor value assets below marketrate and direct a sale to someone they wanted would be a completely unfair process.

This isn’t about politics, it’s about justice. The only reason politics is even in the equation is because Jones has made his living as a political blatherskite.

Law is almost inherently poliical. Politics was in the equation the moment Jones decided to pretend a tragic school shooting was fake news.

So where is justice in this equation then?

The plantiffs getting compensated is the "justice". The courts ruled wrongdoing and the consequence is some sort of payout.

That’s a legal remedy not justice. Justice wouldn’t let Jones potentially buy back the company using money the siphoned off and hid from the court.

I agree. I never said there weren't loopholes in the remedy. We'll see if they manage to close it off.

That is not what happened, though.

One group of creditors said they were willing to abandon some of their claims, which means other creditors would have gotten a larger share of the smaller bid, effectively making these other creditors better off.

The proceeds of the sale will not come close to the value of the judgement - and Jones has acted extremely dishonestly through the process and repeatedly tried to move value from his company to his parents and other affiliate companies. I don't believe it's a fraudulent conveyance but there's a lot of awful happening here.

>A transfer will be fraudulent if made with actual intent to hinder, delay, or defraud any creditor.

If they get it less, later, or more chaotically, or if that was the intent it is.

Unfortunately, norms aren't going to stop this company from reharming it's victims.

They have a debt judgement not economic power. They can sell that debit judgement to a company who collects. They can take the money from the result of the court process and try to buy infowars after this is all over.

They don't have a judgement of ownership in infowars they have a debt and the court is forcing Alex to sell all assets to cover the debt. Then the rest is written off and he gets a black mark on his credit report.

There are rules around this process for a reason. If you allowed someone who has a debt judgement to just take over a company what is it's true value. Alex could try to value infowars at a trillion. So they put it up for an auction to get the real value. That's the fairest way for all cases.

Besides others are in line as well.

And killing the infowars brand means little in the short/long run. The real brand is Alex's name. It's not like his audience will suddenly not follow him to a new show with a new name.

> They don't have a judgement of ownership in infowars they have a debt and the court is forcing Alex to sell all assets to cover the debt.

It's a chapter 7 bankruptcy, the bankruptcy estate already owns the infowars assets.

> There are rules around this process for a reason. If you allowed someone who has a debt judgement to just take over a company what is it's true value. Alex could try to value infowars at a trillion. So they put it up for an auction to get the real value. That's the fairest way for all cases.

Specifically, the reason is protecting minority and junior creditors (including the debtor when assets are in excess of debts). If nobody offered up enough cash to pay off the debts in full and there is only one creditor who would rather have the business than the best cash offer, I don't think there'd be any reason for the courts to object. The big issue is, again, minority creditors getting less than their "fair share" of the assets, along with over-compensating senior claims with junior ones outstanding.

Neither are at issue here - The Onion's offer paid more cash to the minority creditors, the majority creditor opted into the deal, and the assets are clearly worth less than the debts.

"Cash to minority creditors" doesn't matter. "Cash to the estate" is all that matters. The Onion's offer carried $1.75 million in cash to the creditors. Alex Jones's vitamin company offered $3.5 million in cash.

Onions offer was 1.75 million in cash and one party forgiving the estate enough money for the minority creditors to be better off. Which mathematically requires the offer to be worth more than 3.5 million in cash to his estate.

The Onion bid was legally the correct bid to accept. It's got nothing to do with the cash amount, totally irrelevant.

> So they put it up for an auction to get the real value.

Except Onion’s bid minimized Alex Jones debt and was the preferred outcome by his creditors. Offering more cash isn’t the same as making a larger bid here.

It was the preferred outcome by the majority of his creditors, not by all his creditors (note that preferred != economically best). If the creditors were unanimous in their preferences, there would be no issue before the court.

No the judge stated he believes it could be sold at a higher price not that the deal wasn’t structured properly.

There’s been confusion on the math. Because one party was forgoing a portion of their share everyone else not just the other victims would be better off financially.

ps: Economic maximization alone isn’t relevant here. The underlying economic value matters when individuals aren’t voluntarily participating in a transaction. If I destroy your car then I owe you based on the cars worth, but if you trade in your car moderately under blue book perhaps you’re just in a hurry.

I think the word "preferred" has been a bit overloaded in this discussion. There is a sense of economic advantage that you may be using, and this deal in that sense is "preferred" for everyone. There is the other sense of stated preferences, and this deal is clearly not in the stated preferences of one of the parties (hence the appeal to a court).

I think if the creditors unanimously wanted this to happen, it probably would not have been reversed over the idea that there could have been a higher value. The fact that this issue was raised to a court indicates that at least one creditor did not prefer it.

The article mentions Alex Jones was objecting to the transfer rather than creditors. Having a new round of bidding, especially with increased publicity is a reasonable thing to do.

I’m simply agreeing with independent 3rd parties who state that The Onion’s bid was larger and better for the creditors. Alex Jones clearly doesn’t want his life’s worked turned into such an obvious mockery, but while he’d love to sell these business to his parents for 1 dollar but the courts are acting to maximize the transaction’s value. Thus he can only object in terms of monetary value not his personal preferences.

Does the business that offered to buy InfoWars also not get shafted by the sale to The Onion?

By one creditor agreeing to forgo their debt only if The Onion buys it, that single creditor puts any other potential buyer at a disadvantage. It seems the highest bidder, regardless of whether that is another Alex Jones entity, has a fair counterargument such that this type of sweetheart deal is not fair to interested purchasers.

In what way is that different from any other larger bid? The math is identical to them borrowing ~5 million and then getting it back immediately afterwards.

In both cases the other creditors end up with more money and Alex Jones ends up with less dept. It feels unfair because you’re judging the debt as uncollectible, but they would be receiving more cash from other winners so they aren’t just sacrificing hypothetical money.

I’m sure if a large enough offer was made they would happily walk away with everything they would be entitled to, but losing some cash for a final fuck to someone who profited from their suffering and actively attacked them seems like a reasonable tradeoff.

It is both unfair to Alex Jones and any third party bidding on the asset. If some entity was willing to pay more for InfoWars than the debt AJ owes his creditors, he would be able to keep the extra.

If A owes B and C money and has to sell some asset to satisify the claim, the only fair way to value the asset is to sell it in the open market, an auction. If D will pay $5 for it and E will pay $500 for it, it would be unfair to both A and E if B waves his hands and say he forgoes his claim so long as D gets to buy the item.

I understand that InfoWars is likely being sold at auction because no buyer was willing to purchase it for a price that would satisify the debt before bankruptcy, but there is a nomzero chance that some buyer shows up and is willing to pay more for it than someone else specifically to keep it out of that particular buyers hands. Strange. Farfetched. Buy possible. And it wouldn't be fair to allow preference by those owed the debt as it defeats the fair market price process.

It’s normal for entities owed money to be able to use that debt in these kinds of auctions. They still need to cover whatever fraction of debt is owed to 3rd parties with actual cash. This is a backstop as auctions often result in far lower values for assets than a longer sales process can provide.

It also results in debtors getting out of more debt.

> I understand that InfoWars is likely being sold at auction because no buyer was willing to purchase it for a price that would satisify the debt before bankruptcy, but there is a nomzero chance that some buyer shows up and is willing to pay more for it than someone else specifically to keep it out of that particular buyers hands. Strange. Farfetched. Buy possible. And it wouldn't be fair to allow preference by those owed the debt as it defeats the fair market price process.

A blind auction happened and if someone had offered even 1% of Alex Jones debt for info wars they would have won. The specific deal setup by the Onion provided 1.7 million dollars to satisfy other creditors, but the Texas families are owed 49 million. So even if the Connecticut families agreed to accept nothing any deal handing more than 1.7 million to the Texas families would have won.

Further, while it seems impossible for Alex Jones to ever get out of this debt, the Onion deal got him closest to that possibility.

> And killing the infowars brand means little in the short/long run. The real brand is Alex's name. It's not like his audience will suddenly not follow him to a new show with a new name.

This is absolutely true. Other media people that lost their job or channel, handle on various platforms, typically refresh to the same number of followers within a year or two.

> The real brand is Alex's name. It's not like his audience will suddenly not follow him to a new show with a new name.

They get to garnish those profits, too.

No bankruptcy resolves the debt. Otherwise there would be no point in a bankruptcy process.

No, not necessarily, and not in this case.

https://www.reuters.com/legal/alex-jones-cant-avoid-sandy-ho...

> Conspiracy theorist Alex Jones cannot use his personal bankruptcy to escape paying at least $1.1 billion in defamation damages stemming from his repeated lies about the 2012 Sandy Hook elementary school massacre, a U.S. bankruptcy judge ruled Thursday.

> Bankruptcy can be used to wipe out debts and legal judgments, but not if they result from "willful or malicious injury" caused by the debtor, according to a decision by U.S. Bankruptcy Judge Christopher Lopez in Houston, Texas.

Bankruptcies have all sorts of exceptions like this for fraud, student loans, child support, unpaid taxes, etc.

Exactly.

The intent of bankruptcy law is to benefit the economy by allowing people and corporations to take risks and start over.

It's not to let them get away with defamation.

So there's a line between healthy economic risk-taking (bankruptcy discharges) and bad behavior (bankruptcy doesn't affect that).

FTX creditors would like to have a word with you.

Alex Jones told the court that Alex Jones was just a character he played, so that character should now belong to the bankruptcy estate and be sold off. If Alex Jones were to play Alex Jones on TV ever again, that would be a copyright violation against whoever owns the Alex Jones character.

It does seem likely to be true, although apparently, based on its bid, his affiliated company sees $3.5 million worth of extra value in keeping the Infowars brand and structure as opposed to going that route.

>It's not like his audience will suddenly not follow him to a new show with a new name.

you'd be surprised how many fall off from a migration. It's no different network effect from anything else. The hardcore will follow, the passive will fall off. Even a cult following like this isn't immune to this (simply more resilient).

Nah it's just typical rich people getting away with everything stuff & we'll continue to let it happen because we are hapless.

It does really appear that America's getting her own, homegrown oligarchs.

We've had them for a long time; basically the only time we've tried to reduce their power was the Great Depression and post-WWII era, but since the 70s we've been letting them off the leash.

Correct. 10/10 summary

Carnegie, Vanderbilt, Rockefeller... we've had them.

They've mostly kept a low profile since the Great Depression though. And plenty would be oligarchs were taxed out of the upper class by the WW2 tax brackets.

The families that lost their wealth in the Civil War and the families who had to pay a little more tax because of the New Deal and the people still mad about LBJ era civil rights legislation have all banded together.

America has had oligarchs for a very long time. The government is very much in the pocket of big businesses

> Is the issue that there are other creditors who are unhappy with this, who would get paid before the aggrieved families' damages would? The lawyers seem to be fine with it, as they're the ones advocating for this plan...

Nope. Under the rejected deal, other creditors would have seen a larger payout, because aggrieved families are actual two separate groups. One with a claim near a billion dollars, and other with a claim of only a few million (I think, it may be less).

As a result the aggrieved families with the larger claim were set to basically hoover up all the cash from the bankruptcy, and the deal with the Onion was to create a better deal for the other families by having the larger claim reduced to allow a fair split of the total cash raised.

Also of note, the other creditors agreed to this bid.

$1.5 billion is more than Exxon paid for the Exxon Valdez oil spill. Alex Jones must have been really nasty.

I don't know everything but I visited Valdez once and the locals told me Exxon wrote the 1.5 billion off of their taxable income so ended up not being punished.

The locals are right to be pissed.

But the logic seems a bit flawed... when you spend 2.1 billion in funding and then write it off on taxes, you are not saving 2.1 billion, you are saving YourTaxRate% of 2.1 billion, right?

The environment is lucky that it was Exxon who made the mistake of hiring an incompetent and overworked crew (per NTSB); they had more resources to deal with the consequences of an (allegedly?) drunk captain than smaller firms. I had a PhD relative working at Exxon whose work was halted and spent a year or two of his life working on the mess; not sure if that was part of the 2.1 billion or in addition to it. Certainly there was non-financial opportunity cost not even measured.

Like "Fire safety codes written in blood", the international requirement for oil tankers to have double hulls ensued.

> I have to say, just as a matter of gut instinct, it sure feels like when the court finds that Alex Jones damaged people—at a value orders of magnitude beyond that of his company—those people should be allowed to decide that, to them, there's value in snuffing out his ill-behaving company altogether.

It seems like there's an easy way for them to do that though: Just bid on it themselves and dispose of it however they want. They can bid arbitrarily high because they're the ones who get the money, if they want to dismantle the company or sell it to The Onion more than they want the money from what would otherwise be the highest bidder.

That's what they did, and that's what was rejected here, right?

Although it sounds like maybe this was more of a procedural rejection than a dispositive one...

> That's what they did, and that's what was rejected here, right?

Except they weren't the highest bidder?

They were if you count the amount they claimed to be putting in from their award:

“The total value of The Onion’s bid was $7 million, including $1.75 million in cash put up by Global Tetrahedron, with the rest coming from the families of the Sandy Hook shooting victims, who essentially opted to put a portion of their potential earnings from a defamation judgment against Mr. Jones toward The Onion’s bid.”

Their bid was essentially "something that economically feels like $100k more than the next highest bidder to people who aren't us" which is a clever contractual construction but not an auction bid.

Not if they have to put up actual cash...

Do they though? Put up that portion of the debt owed to them by the estate, which should be valued in at least that amount.

Did you read the article? That's exactly what they did.

Did you read the article? Jones was arguing that the families shouldn't be able to do that but the article doesn't say anything about whether he won that argument and the only reason it specifies for why the judge rejected the sale is this:

> Judge Lopez said that the bankruptcy auction failed to maximize the amount of money that the sale of Infowars should provide to Mr. Jones’s creditors, including the Sandy Hook families, in part because the bids were submitted in secret.

Which implies they might just be able to redo the auction without secret bids and get the same result.

Once secret bids are known, and the auction is conducted again, usually the party with the biggest pockets then just wades in and takes it.

Once the price is known, several parties tend to walk away.

> Once the price is known, several parties tend to walk away.

This is why you disclose the current winning bid, which will be <minimum bid increment> over the second highest current bid. If that's already more than you're willing to pay then you weren't going to win anyway. If it isn't, you can put in your bid and then the previous winning bidder has to outbid you again. Which they might do, but you don't know that and until the bid is above what you're willing to pay you don't lose anything by placing bids which as far as you know might actually win.

Hence the if

>Isn't it a little strange, though, that the system notionally decided that the families are owed an enormous amount of economic power as compensation for the nasty behavior of Alex Jones' media company, but at the same time it's obliging them not to use that economic power to prevent the sale of the media company to a "new owner" still affiliated with an unrepentant Alex Jones, who will undoubtedly continue the nasty behavior? Just in order to get cash to compensate them at pennies on the dollar for his previous round of nasty behavior?

This is regrettable, but I don't think the court system offers a remedy sufficient for the grief Jones caused. This is why the court awarded what is frankly an absurd sum... truly, what is the point of awarding numbers that large? They're never paid out.

There this a strict defamation case, where the plaintiff's reputations were actually damaged in a way that harmed their income/worth, then we'd likely have seen a more rational award. Whatever it was that Jones did to these people, it's not the same tort as defamation. In that, he calls them embezzlers or pedos or something, they lose their jobs... and we can put a number to the damage he inflicted. Instead, he claimed they were actors, they never had any children, and this was some sort of hoax. Had crazy people coming out of the woodwork to harass them and stalk them. But the only sort of court order that could remediate that would be one that muzzles Jones from saying this shit... prior restraint. Something the Constitution wouldn't allow for.

I actually wonder if what he did shouldn't be characterized as a crime instead of a tort. Were he prosecuted and imprisoned (or even just put on probation), then the government would have the authority/leverage to (temporarily) prohibit this speech. Even then, he'd be made a martyr by his fans and it would continue as soon as the sentence was served.

There was no public auction of InfoWars. That alone is a stain on the whole process. The objective of a bankruptcy court is not to institute some arbitrary meta-ethical standard. It is to deliver maximum cash to the creditors in a fair manner.

>Is the issue that there are other creditors who are unhappy with this, who would get paid before the aggrieved families' damages would? The lawyers seem to be fine with it, as they're the ones advocating for this plan...

Based on discussions I've heard on this subject, a subset of the families was pledging money they didn't have in the non-competitive bidding. This is highly questionable. They may never receive the money they claim for the purchase. So by buying a real asset on the promise of money they aren't going to get, it is taking money away from other people who are rightfully owed money. If they wanted to do it the right way they could try to borrow the money from someone, but nobody in their right mind thinks Alex Jones has this money or ever did. The size of the judgement was calculated to lead to exactly this conclusion. As you said, the judgement was orders of magnitude more than the value of his company. So you should be satisfied with that. It is not necessary for the funniest possible outcome to manifest in order for justice to be served. Alex Jones will not go away because he has rights just like anyone else, and the legal process must conclude eventually.

> There was no public auction of InfoWars. That alone is a stain on the whole process.

Sealed bid auctions are not some absurd rarity in this sort of situation and I have no idea why you believe they are.

> There was no public auction of InfoWars

The auction was indeed very public. The bids were not.

The only requirement to participate was you had to show the Trustee that you were serious and had the means to participate. Only 2 parties did that.

The auction dates were published in newspapers and various news outlets announced that it was going to happen.

> There was no public auction of InfoWars. That alone is a stain on the whole process. The objective of a bankruptcy court is not to institute some arbitrary meta-ethical standard. It is to deliver maximum cash to the creditors in a fair manner.

Again, maximimum value not cash.

I say cash loosely speaking. You at least cannot pledge income from debt that is presently being negotiated down or cancelled. That kind of thing isn't "value" because it's imaginary.

This is completely false.

Debt can absolutely be sold for whatever it is worth. In this case, the Jones' debt owned by the Sandy Hook families is fairly valuable to Jones' other debtors because it means they get a bigger slice of the bankruptcy estate. Thus the Sandy Hook families can offer enough of their Jones' debt in the sale to make it more valuable. (Edit: more complicated than how I explained it because both sets of debtors include Sandy Hook families)

This isn't any more "imaginary" than money itself.

but you can pledge the debt itself.

> I say cash loosely speaking

Is this a legal term or something? Not to be rude, but who cares what you mean by it? It's totally besides the point

If you're talking to me or reading my comment then you should care what I mean. Otherwise you're wasting your time.

Obviously "loosely speaking" is not a legal term but I'm sure there is one that means the same. I mean you need real money to buy things, not bad paper. Bankruptcy does not exist to deliver good feels to people, it exists to settle financial matters as objectively as possible.

Right. The debt owed to the creditors...

One reason to have an actual auction is because the liquidation might more than cover the debt and leave the bankrupt person with excess cash. But that only happens if real cash is generated in a competitive liquidation process. The reasons why this backroom dealing stinks are plentiful...

The actual cash is orders of magnitude less than what the creditors are entitled to... did you read the article?

>2x more cash

But because the largest creditor has a claim that is so much larger, the minority creditors will actually get less cash with the vitamin company offer.

The deal was structured so that the minority creditors would get more cash than from any other offer.

The only creditor that would get less cash from this offer is the sandy hook families and they are fine with that.

A very important point. The Onion was going to give $100,000 more to the other creditors than any other bid. That sounds like the better deal. I can't imagine being owed money and having the judge tell me that I'm being forced to get less money in the interest of fairness.

How is it the correct decision that Alex Jones has a judgment against him for more money than he claims to have, but also Alex Jones has enough money to enter a bid to satisfy the judgement? It’s a farce.

but if we launder it through law talking then it cannot be questioned.

My comment has nothing to do with moral righteousness, merely legal correctness.

However, the idea that the InfoWars brand is worth less than $10 million is a bit silly to me given its reach among crazy (and highly manipulable) people, and the low size of both bids (and the fact that only people intimately involved in bankruptcy procedures knew when and how to put in bids) suggests that the auction process was probably not run correctly.

So where were all the other bidders offering $10 million plus?

Not there because the auction was run in a terrible way - it was very hard to submit a bid and the due date got moved forward at the last minute.

There were rumblings that Elon Musk was going to put in a big bid.

If all parties were happy with a bid, why does it need to be run "fairly"? This isn't house auction offereing up an artifact, this is a man guilty in the court of law going bankrupt and divvying off his assets. If the people in charge of said divvying and the ones owed money are happy, who really cares?

All parties were not happy with the bid, which is why this went to a judge.

That's confusing. We know from the reporting that some parties were happy with the bid. I guess, you mean "not all parties were happy..."?

(Please note: this is not a case of ∀x ∈ X ¬P(x) ≣ ¬∀x ∈ X P(x). ∀x ∈ X ¬P(x) means "for all x not-P", while ¬∀x ∈ X P(x) reads "there exists no x that P", i.e. there is no party that is happy with the bid, which is either a false statement or not the intended meaning. This is actually a common, but not well-known mistake, so I'm pointing it out.)

EDIT: I even found a reference: https://en.wikipedia.org/wiki/Existential_quantification

'All that glisters is not gold.' :)

No but honestly who has any use for the Infowars brand besides Alex Jones and the Onion? What would anyone do with it to get a return on their investment?

I don't really know, but Elon Musk has been known to buy media companies that don't give him a good ROI, and he was making noise about putting a bid together on this one.

> and he was making noise about putting a bid together on this one.

The list of things Musk makes noise about but does not do gets a little longer.

The auctioneer should not have shifted the due date for bids after Elon Musk said this, and we would get a clear mark on that list.

>The other creditors are far better off getting more cash

The other creditors get more cash from The Onion's offer. It was specifically structured to give better-than-next-offer remuneration to minority creditors.

> It was specifically structured to give better-than-next-offer

That is the most farcical bit. When you strip away all the legalese, the offer was literally formulated as "next best offer + $". That is not a valid sealed-bid offer.

The Onion didn't have the cash. It was basically an IOU from one of the families, which is like saying "the very same guy going bankrupt is going to pay us money to buy this business from him" and that makes zero sense. There was also no transparency in the bidding. It should have been a simple auction, to get the maximum amount of money.

> The Onion didn't have the cash.

Correct, it was given up by the majority creditors in exchange for non-monetary considerations (specifically, the moral victory of having The Onion own Infowars).

> It was basically an IOU from one of the families

This is fine, people are allowed to act against their own financial interests. That's one thing that having ownership means is that you can ruin the thing you own for any or no reason. The court has zero reason to intervene if a majority creditor is giving up their own share of the proceeds for any or no reason.

> There was also no transparency in the bidding. It should have been a simple auction, to get the maximum amount of money.

This is a non-issue, the trustee was given wide latitude to dispose of the assets in any way he deems fit.

>This is fine, people are allowed to act against their own financial interests. That's one thing that having ownership means is that you can ruin the thing you own for any or no reason. The court has zero reason to intervene if a majority creditor is giving up their own share of the proceeds for any or no reason.

You're oversimplifying this. If someone owes you $1B and they owe me $2B, and they've got an asset worth $500M, I can't just pledge $2B of bad debt to buy the asset. The only fair way is to sell it for $500M in actual cash. Then it gets divied up accordingly.

>This is a non-issue, the trustee was given wide latitude to dispose of the assets in any way he deems fit.

Isn't it telling that the same judge said it was done improperly? Trustees have an obligation to follow standard practices which maximize cash flow or at least don't give the appearance of impropriety.

> You're oversimplifying this. If someone owes you $1B and they owe me $2B, and they've got an asset worth $500M, I can't just pledge $2B of bad debt to buy the asset.

You actually can, so long as it's the best offer for the other creditors. So long as you can come up with sufficient cash for the minority creditors you're entitled to dispose of the asset in any way you see fit. The Pennsylvania families came up with the cash (via The Onion's cash offer and structuring the payout).

You are absolutely correct. Matt Levine wrote about this topic in his newsletter the other day. Well worth subscribing if corporate/legal shenanigans interest you.

In your theoretical framework you can. In real-life bankruptcy court, you almost certainly can't.

Says who? It was clearly going to work like that until more lawyer nitpicking intervened about the auction (not the sale itself).

Honestly I don't see how this theoretical framework is much different from corporate leveraged buyouts.

This isn't a leveraged buyout. Also this structure is not at all like a leveraged buyout.

My point is going over your head. Pledging money that you will never receive to get over the finish line is not the best offer. You could not consider such debt in any other purchase. Going back to that example, if the guy owed $2B pledged to buy the asset for $500M and the other one didn't even know about the auction, or instead pledged $501M, then the one who was owed less would be stealing from the one who was owed more. The fact that neither of them has any actual money is another very troublesome point on its own, as is the fact that the bidding was completely private. There might have been someone willing to pay 10x the winning bid for InfoWars in actual cash and been out of the loop.

Put it in any other context. Do you think a bank would issue a loan whose repayment was contingent on income from an individual who was seeking relief in bankruptcy? Obviously they would not. The court has an obligation to not accept fugazi money to buy real assets.

My understanding is that the other (minor) creditors would get more cash in the Onion offer because the Sandy hook reps weren’t going to take their huge cut in the event their preferred bid was accepted. That means in any other deal, the other creditors would be strictly worse off. The families would be financially worse off but they were the ones driving the decision, so they clearly felt holistically better off.

I don’t see how they shouldn’t be able to take less money themselves as long as the other creditors also got more money.

> Isn't it telling that the same judge said it was done improperly? Trustees have an obligation to follow standard practices which maximize cash flow or at least don't give the appearance of impropriety.

This is incorrect - trustees have an obligation to maximize the benefit to debtors. You'll see common examples of non-monetary benefit when it comes to wills - a cabinet that may be valued at 150$ but has immense sentimental value may be given to inheritors even if there is a 200k bid on it if that is what the beneficiaries all agree to.

You are treating debt discharging too literally like a numbers game - there are other important factors and in this case all the debtors were aligned and would have clearly preferred the deal with the lower monetary value.

>This is incorrect - trustees have an obligation to maximize the benefit to debtors. You'll see common examples of non-monetary benefit when it comes to wills - a cabinet that may be valued at 150$ but has immense sentimental value may be given to inheritors even if there is a 200k bid on it if that is what the beneficiaries all agree to.

Probate court is different from bankruptcy court. You can only do something nonstandard if all creditors agree. Some of these creditors are almost certainly banks that are owed money by AJ.

>You are treating debt discharging too literally like a numbers game - there are other important factors and in this case all the debtors were aligned and would have clearly preferred the deal with the lower monetary value.

There are very few sentimental factors in bankruptcy. The few that do apply (such as protections of property with little value) exist to benefit the debtor and not the creditors.

>You can only do something nonstandard if all creditors agree.

As far as this NYT story goes, they all did agree. It's AJ's lawyer who intervened.

Even if they all did agree, which I don't believe, someone might want to buy the business for a fair price using real cash. That counts for more than fantasy debt that is going away anyway. These processes exist for legitimate reasons no matter how you feel about it.

Said someone had the opportunity to participate in the auction - only two participants chose to do so. The auction was clearly announced and while there was a rule change midway through (which is what this whole kerfuffle is about) both participants agreed to the rule change.

> If someone owes you $1B and they owe me $2B, and they've got an asset worth $500M, I can't just pledge $2B of bad debt to buy the asset. The only fair way is to sell it for $500M in actual cash

No, that's not the _only_ fair way. Suppose the $2B creditor bids $200M in cash and also agrees to forfeit their share of the proceeds from the sale. Then the $1B creditor would receive the entire $200M, which is more than the $167M they would have received from a $500M cash sale. The bid is effectively equivalent to $600M.

Isn't that what happened in the InfoWars case? The bankruptcy judge agreed that the structure of the Onion's bid was valid; he just said the auction would have continued for more rounds.

>>You're oversimplifying this. If someone owes you $1B and they owe me $2B, and they've got an asset worth $500M, I can't just pledge $2B of bad debt to buy the asset. The only fair way is to sell it for $500M in actual cash. Then it gets divied up accordingly.

Except what if all the creditors prefer that outcome to the "more cash" outcome? If the way it would get divvied up is $499m to you and $1m to me, vs $350m to you and $50m to me (but you get some other benefit that you prefer), why shouldn't that be accepted?

If literally every creditor agreed, maybe so. But I don't think that is the case even among the subset of creditors that is the families. If there are banks involved I'm sure they aren't interested in getting less money.

The two groups of families are the only two creditors. The Connecticut families are owed ~$1bil, the Texas families are owed ~$50mil. Nobody else is getting any money.

The bid that was accepted would give the Texas families more than they would have gotten from the other bid, because the Connecticut families were willing to give it to them, because they valued stripping Jones of his platform higher than the cash.

The only people worse off are the people who submitted the losing bid (Alex Jones' cronies). The creditors, and the estate, were not. And they're the ones the bankruptcy Trustee has the highest duty to.

> Nobody else is getting any money.

It is impossible to infer this simply from the size of the debt. Debts have seniority ordering which dictates who gets paid first, just like liquidation preferences in startups.

Sorry, I was imprecise (and not meaning that it was due to the size of the debt alone).

There are 3 sets of creditors that have potential claims in these proceedings, based on what I can find. The two groups of plaintiffs from the different trials (Connecticut families and Texas families, although there's at least one FBI agent that's part of one of those cases too) and American Express - Jones owes them ~$150k in credit card debt. AmEx is not pushing for this money, for obvious reasons (they wouldn't get it, and it would look bad).

No one in this case is disputing that the money is going to end up with the Sandy Hook families. It's entirely the other bidder in the auction that took this back to the judge.

> Alex Jones's vitamin company offered 2x more cash

Wait, isn't Alex Jone's essentially bankrupted by the ruling for the Sandy Hook parents? If he has that much cash to offer wouldn't that have been given to the parents who won the suit?

I believe officially the vitamin company is owned by his parents and isn't included in the judgement against Alex Jones.

How is that not fraud?

It is. IIRC he started shuffling assets only after the legal consequences got real. But the legal system is moving slowly. And the victims may get tired of chasing his assets

>But the legal system is moving slowly.

FFS, it's actively working in his favor right now!

It's certainly mafia type of behavior. Now Jones has learned the lesson that as long as he doesn't directly own anything, he is effectively defamation proof. It's almost like an inverse RICO case, he does all the crime whole holding none of the money vs a mob boss rolling in dough while never directly committing the crimes.

Since when has that mattered? He'll get a pardon in 1 month anyway.

Only federal crimes can be pardoned by the president.

Everything here is state-level. The next president can't touch any of it.

They've already suspended his sentencing indefinitely due to the election win.

That's a non-sequitur.

Justice departments don't go after presidents or president-elects in order to prevent a constitutional crisis. Impeachment is the remedy in that case.

This policy is entirely unrelated to presidential pardon power.

You're not going after a "President". You are going after a law breaker. He can be President all day long in jail.

The reality is that we've codified that Presidents are largely unable to be investigated and or held to account by the legal system. There was no carve outs in the constitution at any point for anybody in government. This is a new, and probably fatal invention.

> The reality is that we've codified that Presidents are largely unable to be investigated and or held to account by the legal system.

They can be investigated and held to account by Congress. That's what impeachment is. That's the whole point of having impeachment in the constitution.

If Congress fails to exercise its constitutional duty, then the problem lies with the specific representatives that place party above country.

It feels really gross that he was acquitted in the second impeachment partly because he argued that criminal court was the appropriate venue for the issue, and then turned around and argued in criminal court that he was immune for not having been convicted in the impeachment.

I apologize for not getting back to you earlier on this (if you see it at all!)

We've seen it fail over and over. They won't investigate their own seriously, and even when they find the grossest violations of law, they cover it up.

The idea that there will be justice by the voters is laughable.

> He can be President all day long in jail.

Playing devil's advocate, at least in part...

In practice, he cannot perform many of the duties of the office effectively - or perhaps at all - from jail.

The Constitution is the supreme law of the land, and it says he should be President (given the outcome of the process we had). The laws that say he should be in jail are subordinate to the Constitution and so rightly lose out in the minimum way practicable - a delay in sentencing.

...

I do have problems with some of what I've written here, but it seems like a sensible position that could be held unreservedly by someone who disagrees with me on a few questions of fact that do have a subjective component.

Who? Trump? What does that have to do with anything?

Well supposedly federal govt can't intervene in state cases but the conviction against trump is at the state level, so why isn't he being sentenced? Because power isn't about rules.

As others said above, the president has certain immunities to prevent constitutional crises. But that's only for the president, and it's not part of his pardoning powers (which wouldn't work here anyway).

So why isn't he going to jail for felony falsification of business records (forget the classified records case, he's not meant to be immune from that but here we are)

My point is that power is not about what the law says, it's about what people can get away with through their relations with other people.

Trump or Jones?

I agree but the cases are very different. There's not much worth comparing them. It's different kinds of corruption.

His conviction wasn't overturned, they are just delaying his sentencing because he's now going to be the president again. He's not doing it by any power of the federal gov't.

Exactly, there's no rule (certainly no federal rule) that says a guy can't go to jail just because he was elected president. So why isn't he? Because he has power that is not assigned to him by any law. He is a bully with a cult of personality that makes people fear him and/or act as his sycophants.

I wouldn't bet on this. Trump can use a punitive executive order to pressure the state until the governor pardons Alex Jones.

Pardons are for crimes. This is a civil suit, not a criminal one.

Fraud is a crime.

There's no fraud conviction, there can't be a pardon. There's not even fraud charges, so what would the pardon be for... I find your rebuttal confusing.

You can pre-emptively pardon someone. Seemingly.

Likely different legal entities. Johnson & Johnson tried to get out of the talc powder settlement by creating a different legal entity to contain responsibility and damages. A court ruled that invalid but this type of corporate entity manipulation happens all the time. With the vitamin company, it might be that Jones is not majority owner of it but the other owners are sympathetic to him. Giving Jones' ownership stake to the Infowars creditors wouldn't change anything if Jones is not the controlling owner. This is all supposition on my part and perhaps he is the controlling owner but the court for some reason decided not to include it in his bankruptcy assets. It's a weird world when we allow artificial people to exist in the form of corporations.

> This is probably the correct decision.

It is 100% not. It makes fewer creditors whole. Simple as that. It's worse for all creditors involved, as per the creditors. Any suggestion that this is "correct" or better is out of ignorance or deceit.

> The other creditors are far better off getting more cash

The nature of the original deal guaranteed the other creditors got more money than they would from the other offer by $100,000 more. Suggesting that they were getting less is ignorant.

> the onion gets to buy this website for no money.

Again, the Onion was spending real cash.

At best your are completely ignorant of the deal.

It's correct if there's a new, open auction that does even better than the current Onion offer.

The judge ruled out holding a new auction.

...But then, why not cancel that new auction too, in hopes that a third auction will yield even more?

Nothing in the order says the accounting of the bid value was wrong it was mostly the form of the auction taking place as a single sealed bid round that the judge seems to quibble with. Counting debt as part of the bid is also not that unusual or weird, banks will bid their outstanding debt on foreclosure auctions all the time to get control of the house and sell it normally.

How can any entity related to Alex Jones be allowed to buy the InfoWars assets?

In the same way non-corporate 'entities' related to Alex Jones don't owe his debts.

If there's a company of which he's a minority owner, they could decide to buy it, and it would be like his brother buying it.

It is pure bullshit is what it is.

It is fraud and that bid should be disqualified.

> cash completely trumps any notion of "giving up debt."

Not true. The entire point of bankruptcy proceedings is to resolve debt to the creditors.

And in fact, that wasn't the issue that the Judge took here. The judge didn't like the amount, not the creditors bid.

> The other creditors are far better off getting more cash, and those $7 million of claims are worth way less than one cent per dollar.

The other creditors signed off on the deal which is why the Trustee took the bid. Alex Jones would have $3.5 million dollars less debt than if he took the FAUC bid. Which is exactly what the Trustee should prioritize, cutting back on Jone's debt.

I read the details of the auction out of interest. I think it is valid, and in the best interests of the creditors as it currently stands. Interested to see how others have read into it that they offered "more". It was a blind auction and the result is clearly in the best interests of the creditors to take the onion deal.

>Alex Jones's vitamin company offered 2x more cash

Yes, but shouldn't that already be due to the victims?

This is worse for the victims, because rather than getting that money, and future revenue, they just get that money.

And this all ignores the harm to the victims, of giving Jones control of Infowars again.

They aren't ever going to see all of this $1.5B. I doubt most even want all that money, what they probably want is for Jones not to be able to keep his mouth piece.

No, Legal Eagle covered the sale, and the agreement giving it to the Onion maximized the proceeds to both of the Sandy Hook groups that have won judgement against Alex Jones. With the sale to Alex Jones's set of straw buyers, that wasn't true.

The sale to Alex Jones would have given the creditors basically nothing since the assets used to buy should already be theirs.

Will hold judgement until I read the judge’s opinion, but this bit:

“‘It seemed doomed almost from the moment they decided to go to a sealed bid,’ Judge Lopez said.”

is nonsense from an auction theoretical perspective.

First-price sealed-bid auctions are a vetted auction system [1]—almost all real estate and corporate mergers, for example, are sold like this, as are government tenders [2]. (They’re not as efficient as Vickrey auctions [3], but nobody actually does that.)

The bankruptcy estate is selling the asset. Not Alex Jones. The creditors should be deciding who buys their stuff. Not a judge. (The judge is there to coördinate the creditors, not substitute his judgement for theirs.)

[1] https://en.m.wikipedia.org/wiki/First-price_sealed-bid_aucti...

[2] https://www.investopedia.com/terms/s/sealed-bid-auction.asp

[3] https://en.m.wikipedia.org/wiki/Vickrey_auction

> They’re not as efficient as Vickrey auctions [3], but nobody actually does that.

I've always been curious -- do you know why?

It's certainly not for lack of familiarity, considering that paying the second-highest bid is basically how eBay works.

And eBay doesn't reveal people's maximum bids either. And so between that and the prevalence of last-second sniping, it essentially operates as sealed for all practical purposes.

The "winning" offer was formulated such that its cash value depended upon the next best offer. I.e., when you strip away the complexity it was of the form "next best offer + $". That this bid "won" indicates the "auction" was not a sealed-bid auction of the kind you are thinking of.

Wait no none of this is right, it doesn't make it an unsealed auction just because one or more of the bids has terms and conditions. This is how every real-estate transaction is conducted.

What makes it fine in the end is that once you collect all the bids and resolve the legal paperwork you can assign values to the individual bids and compare them which is how people who sell their homes choose what offer to go with. And home sellers do consider intangibles and go with lower-cash offers all the time.

I don't really understand what all the legal kerfuffle is about. Is the court really going to force the families into a sale they don't want when the sale is for their benefit however they choose to define it?

Like other commenters, you have posited a theoretical framework for how a bankruptcy court theoretically should work. None of this is how bankruptcy court actually works.

> you have posited a theoretical framework for how a bankruptcy court theoretically should work. None of this is how bankruptcy court actually works

Literally started by saying I'm holding judgement until reading the opinion.

My point is simply that if the reason the judge raised for re-starting the process is solely around the bids being sealed, they're wrong in a provable way.

Oh, it's not that at all. The problem with auction procedures in this case wasn't the actual auction methodology, but the lack of notice and the difficulty of submitting a bid. In any case, a judge does make the decisions in a bankruptcy court when the parties disagree about things. In this case, the creditors are not in agreement that this was okay.

A sealed-bid auction is a bit non-standard in a bankruptcy, but there should be no problem if all the bids get revealed post-facto. I wouldn't be surprised if this was mentioned in the opinion because it doesn't help you say that the auction was fair in light of everything else (if you're going to do non-standard stiff, do it in a very clean-looking way).

> roblem with auction procedures in this case wasn't the actual auction methodology, but the lack of notice and the difficulty of submitting a bid

Which would make sense. That's not what the article quotes as the judge's reason (nor what you've said).

The quote in the article criticises sealed bids. That's mind-blowingly wrong to the point of having substance on appeal. It's so wrong I expressed scepticism it's actually the case, scepticism based on experience evaluating bankruptcy claims.

Yeah, the article is incorrect about that (like I said, sealed bids are very unusual in bankruptcy auctions, but the actual opinion cites the other stuff), and when I said that the auction procedure was farcical, I did not mean that the underlying algorithm of the auction was wrong, but that the procedures run by the auctioneer were awful.

Are there practically any other creditors? I would think the creditor owed $1.5B would cause all other creditors to become irrelevant rounding errors as a fraction of a percent. So if the families were to bid $X, then they'd be paying it right back into their other pocket. Seems like just a technicality or theatrics to require them to temporarily come up with cash just to give it right back to themselves. But lawyers love arguing technicalities.

All debt is not equal in seniority (seniority != amount), and yes, there are other creditors. Many people have credit cards, get bank loans, and have a mortgage, and I assume he has also borrowed money from several other sources. Those are creditors.

The next thing to do is think about the order these people get to take money in. Debt isn't one pool, it's a set of multiple priority queues. Asset-backed lines of credit typically have a senior claim to that asset but a junior claim to the general pool of money - Alex Jones, if forced to sell a hypothetical car with a hypothetical $1000 loan, will be paying back that loan in its entirety (if covered by the sale of the car) before the proceeds of that sale go to the $1.5 billion debt. Your general accounts are similarly ordered.

Yes, the set of Sandy Hook parents who won $1.5B would normally get essentially everything, but the Onion agreement had the minority creditors get a lot more money.

> Especially when the debt being settled is astronomically large and you are giving up a very small portion of it ($7 million out of $1.5 billion). The other creditors are far better off getting more cash, and those $7 million of claims are worth way less than one cent per dollar.

The whole purpose of the deal was to give everyone, except the largest creditor, more cash. Sure the other deal offered 2x more cash, but the largest creditor is so disproportionately large compared to all the other creditors, they would have basically taken all the cash and left little to nothing for the other creditors. The rejected deal involved the largest creditor voluntarily giving up part of their claim, resulting in a much larger (I.e. something like 10x larger) payout for other creditors, despite the lower dollar value on the entire deal.

So yeah, the other creditors are far better off getting more cash. But to do that InfoWars would need to sell for many multiples more than highest bid seen so far.

If the victims wanted to be victimized again just because people offer more money to continue the victimization operation, sure.

Unfortunately, giving the victims no choice in who owns this stuff means allowing it to be reused for the same harm.

Money is not the only variable in the equation. This is not a legal interpretation of the judges decision.

Side question, because this is the first I'm hearing of him selling vitamins.

Can his vitamins possibly be good? Who would buy these over day, centrum or Costco gummy vitamins.

This is weird to me.

it's fraud, Jones' parents own the vitamin company

So Alex Jones gets to cheat his way out of consequences yet again by transferring his assets to a new company and shopping for a sympathetic judge, just like the last several times?

> Additionally, the auction here was run farcically, and basically seemed designed to create an outcome where the onion gets to buy this website for no money.

You have been lied to.

As I see it, the situation couldn't be any simpler: the oligarchs will take what they want, justice be damned. It was a done deal as soon as Musk entered the scene.

There's a deep irony in your post that you say it's the correct decision when it's Alex Jones attempting to strongarm his Infowars rights back after losing them in court because he failed to pay his outstanding debts.

Like you do see the obvious corruption here, right?

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