The parent company of Alex Jones’ Infowars program seems unlikely to reorganize in bankruptcy due to an irreparable feud between the company’s chief officer and lead attorney, according to a court-appointed trustee.
Trustee Melissa Haselden informed the US Bankruptcy Court for the Southern District of Texas in a brief on Sunday that efforts to rehabilitate Free Speech Systems LLC in Chapter 11 are on the verge of failing. This statement comes as Free Speech’s chief restructuring officer, Patrick Magill, is seeking to replace lead attorney Ray Battaglia following a breakdown in their relationship.
A recent dispute between Magill and Battaglia, detailed in heavily-redacted briefs, has cast doubts on the company’s exit from bankruptcy and its plan to settle approximately $1.5 billion in claims from families of Sandy Hook School shooting victims through a Chapter 11 plan. The company is set to appear in court on March 25 to seek approval for its proposed reorganization plan, but the impact of Battaglia’s motion to withdraw and Magill’s request to swap legal representation remains uncertain.
“In the interest of transparency, the Trustee has concluded that the case is quickly approaching, if it has not already arrived, at a place in which reorganization is not possible,” Hadelden stated in Sunday’s filing.
Free Speech is facing ongoing litigation against a dietary supplement provider indirectly owned by Jones and his father, alleging that the Infowars vendor received millions in insider payments.
A group of Sandy Hook families expressed concern in a March 8 filing about an apparent accusation made by Magill against Battaglia, claiming that he “was not independent, particularly with respect to the debtor’s sole shareholder, Alex Jones.”
The families said they are troubled by the current dispute’s finger-pointing and dysfunction revealed in the pleadings, emphasizing that these events were not disclosed to creditors or the court in advance.
If the company is to change its legal representation, the families urged it to do so cost-effectively and to challenge Battaglia’s fees if he acted under a conflict of interest or defied Magill’s instructions.
The parties are scheduled to appear in court on Monday afternoon regarding the requests for a change of counsel.
Jones and his right-wing media company filed for bankruptcy separately in 2022 following defamation lawsuits over their portrayal of the 2012 school shooting as a hoax.
Last month, the Sandy Hook families unanimously voted in favor of a Chapter 11 plan for Jones that involves liquidating and redistributing his assets and cash.
The trustee is being represented by The Law Office of Liz Freeman.
The Connecticut families are represented by Paul Weiss Rifkind Wharton & Garrison LLP, Koskoff Koskoff & Bieder PC, and Cain & Skarnulis PLLC.
Free Speech’s proposed legal counsel is O’ConnorWechsler PLLC.
The case is In re Free Speech Systems LLC, Bankr. S.D. Tex., No. 22-60043, brief filed 3/10/24.