Sandy Hook families agree to Alex Jones' bankruptcy liquidation

By Dietrich Knauth

NEW YORK (Reuters) - Families of the Sandy Hook massacre victims claimed victory in Alex Jones' bankruptcy case on Friday, accepting the conspiracy theorist's proposal to sell his assets, including InfoWars, to partly pay legal judgments to them for his lies about the 2012 U.S. school shooting.

Jones, who filed for U.S. bankruptcy protection 17 months ago, has given up trying to reach a bankruptcy deal that would reduce the $1.5 billion that he owes to the relatives of 20 students and six staff members killed in the mass shooting at Sandy Hook Elementary School in Newtown, Connecticut.

Instead, Jones decided this week to proceed with a court-supervised liquidation of his assets.

Chris Mattei, an attorney for the Sandy Hook families, said on Friday that Jones' pivot to a Chapter 7 liquidation was a moment of "meaningful accountability" for his repeated lies, pushing the broadcaster to the "brink of justice."

"Alex Jones has hurt so many people," Mattei said. "The Connecticut families have fought for years to hold him responsible no matter the cost and at great personal peril."

Courts in Texas and Connecticut have ordered Jones to pay $1.5 billion to the Sandy Hook families after Jones claimed for years that the school killings were staged with actors as part of a government plot to seize Americans' guns. Jones has since acknowledged that the shootings occurred.

Bankruptcy can be used to wipe out debts and legal judgments, but the judge overseeing Jones' case ruled in October that most of the defamation verdicts cannot be legally discharged because they resulted from "willful and malicious injury" caused by Jones. Jones' decision to pursue a Chapter 7 liquidation doesn't alter that ruling.

Jones had asked the Sandy Hook families to vote for a bankruptcy settlement that would have paid them $55 million, but they unanimously rejected the deal and offered their own proposal for selling his assets.

The families said in a Friday court filing that they will back down from their plan and allow Jones to convert his case to a straightforward liquidation.

Jones has said that the defamation judgments are far larger than the total value of his assets.

While the liquidation will yield only a fraction of the money he owes the families, they objected to his proposal because it would have kept him in control of both InfoWars and his wealth for many years, while also capping the total amount that he would pay toward the defamation claims.

The court-supervised liquidation will allow the families to benefit from immediate asset sales, while keeping their claim on Jones' assets alive in the event he accrues wealth in the future.

On his InfoWars website, Jones said Tuesday on "The Alex Jones Show" that he expects to lose everything except for his home in bankruptcy, but he said he would find a way to continue broadcasting and would "work for free" rather than be "silenced" by the legal judgments.

Attorneys for Jones and the Sandy Hook families did not immediately respond to questions about how Jones would address the lingering legal debts after his assets are sold off in bankruptcy.

U.S. Bankruptcy Judge Christopher Lopez in Houston, Texas will consider Jones' request to convert his case to Chapter 7 liquidation at a June 14 court hearing.

(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and Cynthia Osterman)