Families of victims of the Sandy Hook Elementary School massacre have asked a judge to throw out InfoWars' bankruptcy, saying it was filed to avoid upcoming trials to determine damages in defamation cases the families have won against the right-wing website, Reuters reported. The families filed their motion on Tuesday in the U.S. Bankruptcy Court for the Southern District of Texas, where InfoWars founder Alex Jones placed three holding companies into chapter 11 on April 17. The bankruptcy came in the wake of court judgments that found conspiracy theorist Jones and his media businesses liable in multiple defamation lawsuits after he falsely claimed that the 2012 shooting in Newtown, Conn. that left 20 children and six school employees dead was a hoax. The families said in Tuesday's filing that the bankruptcy is "not typical chapter 11" and that the case has "no valid bankruptcy purpose" and should be dismissed with prejudice as a bad-faith filing. InfoWars attorney Kyung Lee of Parkins Lee & Rubio previously rejected attacks on the legitimacy of the case and argued that the bankruptcy is necessary to preserve the means to eventually pay damages in the defamation cases. The chapter 11 case was filed shortly before a trial to determine how much the families were owed in one of the lawsuits was scheduled to begin in Texas. It was put on hold as a result of the bankruptcy.
Lawyers for InfoWars defended the far-right wing website’s decision to seek bankruptcy protection under a provision of the law that is for small and family-owned businesses, noting that founder Alex Jones’ parents have been involved in his endeavors, Reuters reported. Their statements came in court papers filed on Monday in response to questions U.S. Bankruptcy Judge Christopher Lopez, who is overseeing the case, raised at a hearing last week surrounding two of the three Jones-related entities, InfoW LLC and Prison Planet TV LLC, that were placed into bankruptcy in Victoria, Texas on April 17. InfoWars filed for bankruptcy following recent court judgments that found Jones and his media businesses liable in multiple defamation lawsuits after he falsely claimed that the 2012 Sandy Hook Elementary School shooting in Newtown, Connecticut that left 20 children and six school employees dead was a hoax. Lawyers for InfoWars have said the bankruptcy is necessary to preserve the means to eventually pay damages in the cases. The U.S. Department of Justice’s bankruptcy watchdog and families of the Sandy Hook victims have questioned the legitimacy of the bankruptcy filing, with some saying Jones and his businesses are using the legal protection afforded under chapter 11 to avoid trials that will determine the amount of damages owed. One trial in Texas was set to start this week but was halted as a result of the bankruptcy. Lopez specifically had asked InfoWars attorney Kyung Lee of Parkins Lee & Rubio how InfoW and Prison Planet qualify for bankruptcy protection under subchapter V of chapter 11 designed to aid small businesses. Lopez noted that both entities exist solely to hold intellectual property and don’t have operations. To qualify for subchapter V protection, a debtor must be “engaged in commercial or business activities.” Subchapter V, which was enacted in 2019, is popular for family-owned businesses. The company’s lawyers said in Monday’s filing that until very recently, the bankrupt entities were single-member owned LLCs that “operated within a family-owned structure, which include Mr. Jones’ father and mother.” The brief did not provide further details of their involvement.
About 40% of U.S. small businesses intend to raise selling prices by 10% or more amid decades-high inflation, according to a survey from the National Federation of Independent Business, Bloomberg News reported. Overall, more than two-thirds of the respondents plan to increase prices in the next three months, according to the survey, conducted between April 14 and April 17 among 540 business owners. Almost half of the small firms are planning increases of 4% to 9%. The report suggests that many businesses are planning increases that are above the current rate of national inflation — the consumer-price index rose 8.5% in March, the most since 1981. Nearly nine in ten employers in the NFIB survey said they’ve had to raise prices to absorb some of the costs.
The rule that allows American tourists to bring back souvenirs from overseas duty-free is now being used by companies to avoid billions of dollars in tariffs — and it’s perfectly legal, the Wall Street Journal reported. Known as the de minimis rule, the exemption has been around for decades, deriving its name from the Latin term for something too small to fuss with. For many years, it was just that — accounting for such a sliver of imports that U.S. Customs and Border Protection didn’t even bother to keep track of them. It’s a sliver no more. The known value of de minimis imports soared to over $67 billion in 2020 from an estimated $40 million in 2012, according to previously unreported U.S. Customs data. The rise of e-commerce in recent years accustomed shoppers to order just a few items at a time — which easily falls under the de minimis rules — and led to steady growth in such shipments. Then a sharp jump came in the wake of higher tariffs imposed by the Trump administration on Chinese imports, according to the Customs data and logistics industry executives, who say the new levies led importers to devise ways to dodge paying them. As a result, more than a tenth of Chinese imports by value now arrive as de minimis shipments, the Customs data indicate, up from well under 1% a decade ago. The increase was also fueled by a 2016 decision by Congress to raise the maximum value of de minimis imports to $800, up from $200. The law allows U.S. retailers who sell Chinese imports — along with Chinese companies that sell directly to U.S. consumers — to avoid tariffs on goods as long as they are packaged and addressed to individual buyers and fall below the $800 cap.
Relatives of children killed in the 2012 Sandy Hook massacre could have a harder time collecting from far-right radio host Alex Jones under the legal strategy being employed by the conspiracy theorist, Bloomberg News reported. Companies tied to Jones filed for bankruptcy on Sunday seeking special rules reserved for small business owners who have fallen on hard times. Those rules would speed up proceedings and reduce the families’ influence on the reorganization by preventing them from forming a creditors committee. Jones acknowledged in an internet broadcast that his Infowars empire is under heavy financial strain and asked listeners for money. The relatives of Sandy Hook victims won key court rulings against Jones after he called the shootings a hoax. A trial in Connecticut will eventually determine the size of the damages. He was also found liable in similar proceedings in Texas. Three entities, including one that holds the rights to the website Infowars, sought chapter 11 protection in Victoria, Texas. Each estimated liabilities of as much as $10 million, according to court filings. Jones’ main holding company, Free Speech Systems LLC, didn’t file for bankruptcy. Under small-business bankruptcy rules, known as Subchapter V, the Sandy Hook families won’t be able to join an official committee of creditors, which can have influence in major corporate cases but aren’t typically set up in Subchapter V filings. Subchapter V cases are limited to private companies that face only a few million dollars in debt, and rarely involve complicated legal disputes like whether a parent company can be shielded from lawsuits without filing for bankruptcy itself. In the Infowars bankruptcy, lawyers set up a trust that would pay people suing the companies, and Jones handed over his equity in the entities to the trust. The units in bankruptcy “have no purpose other than to hold assets which may be used by other entities” and their only liabilities are the litigation claims, according to court papers. By establishing a trust to settle legal claims in bankruptcy, Jones’s companies are following a controversial playbook used by other corporations facing significant lawsuits. Companies including opioid maker Purdue Pharma LP and youth organization Boy Scouts of America have sought chapter 11 protection to settle thousands of cases and streamline payouts to victims claiming harm. Jones put $725,000 of his own money into the trust to cover the costs of the chapter 11 filings. Additional funds, including $2 million cash, could flow into the trust as a result of the bankruptcy, according to court papers. The trust is a way to ensure litigation creditors can be paid in full, rather than get uneven payouts simply due to the timing of trials, lawyers for the companies said in court papers. Jury selection for the Texas trial is set to begin next week, while the Connecticut trial is still months away.
