Mr. Jones has handed over control of his far-right website and media company to outside administrators, who have filed for chapter 11 bankruptcy protection for it and other business ventures he owns in order to halt pending litigation and try to resolve the legal claims against him.
The bankruptcy comes after Mr. Jones was held liable by default in Texas and Connecticut courts last year to families of the Sandy Hook victims in lawsuits alleging his false comments about the shooting had defamed them and caused emotional distress.
Mr. Jones was sued by the families in 2018 for repeatedly claiming the shooting was a hoax and falsely claiming the families were actors who faked their loved ones' deaths. Neither court has issued a formal monetary award against him or his companies.
Mr. Jones and his attorneys have previously denied inciting others to harass the victims' families and have characterized the lawsuits as a threat to his First Amendment free speech rights.
According to court documents, the Texas court was planning to appoint a jury later this month to calculate damages. According to a declaration filed in bankruptcy court on Monday by the businesses' proposed restructuring officer, W. Marc Schwartz, this risked dismantling Mr. Jones' assets before the Connecticut plaintiffs or other creditors could collect.
Mr. Schwartz stated that installing "neutral management" at the businesses would preserve their value and make a potential settlement easier to reach, which is unlikely to occur outside of a bankruptcy plan.
Mr. Jones's Connecticut lawyer, Chris Mattei, said Monday that the bankruptcy filing is postponing an unavoidable trial in which Mr. Jones "will be held accountable for his profit-driven campaign of lies against the Sandy Hook families who have brought this lawsuit."
Chapter 11 filings generally put an end to pending civil lawsuits, giving corporate and individual defendants facing legal trouble a chance to negotiate a resolution.
According to papers filed Monday in the United States Bankruptcy Court in Victoria, Texas, Mr. Jones and his businesses have spent $10 million on legal fees related to the Sandy Hook lawsuits. According to court documents, Mr. Jones contributed $725,000 to the administration of the chapter 11 case in order to establish a settlement trust with another $2 million in cash. Two retired bankruptcy judges have offered to lead the settlement trust and exercise "full governance authority" over Infowars and the other assets.
A Connecticut judge found Mr. Jones in civil contempt in March after he refused to comply with a court order to be deposed by victims' families, who turned down his offer to settle for $120,000 per plaintiff.
Plaintiffs' lawyers in Texas sought to seize Mr. Jones' assets earlier this month, alleging that he had "conspired to divert his assets to shell companies owned by insiders like his parents, his children, and himself" in order to thwart collection efforts. According to the Texas plaintiffs, Mr. Jones received approximately $18 million from Free Speech Systems LLC, which operates Infowars, between 2018 and 2021.
Mr. Jones was found liable by default by courts in Texas and Connecticut in September and November, respectively, as a penalty for failing to comply with court-ordered discovery for documents and information.
Mr. Jones frequently employs his platform to promote debunked conspiracy theories. He has been barred from using social media platforms such as Facebook Inc. and Twitter Inc. in recent years.
Families of the victims reached a $73 million settlement in February with the insurers of Remington Arms Co., which manufactured the Bushmaster rifle used in the massacre and was dissolved in 2020 after filing for bankruptcy.