The Onion's purchase of Alex Jones' Infowars stopped by US judge

By Dietrich Knauth

NEW YORK (Reuters) -A U.S. bankruptcy judge on Tuesday stopped the parody news site the Onion from buying conspiracy theorist Alex Jones' Infowars website, ruling that a bankruptcy auction did not result in the best possible bids.

U.S. Bankruptcy Judge Christopher Lopez rejected Jones' claims that the auction was plagued by "collusion," at the end of a two-day hearing in Houston.

But he said the court-appointed bankruptcy trustee who ran the auction made "a good-faith error" by quickly asking for final offers for Infowars instead of encouraging more back-and-forth bidding between the Onion and a company affiliated with Jones' supplement-selling businesses, which was the runner-up.

"This should have been opened back up, and it should have been opened back up for everybody," Lopez said. "It's clear the trustee left the potential for a lot of money on the table."

Lopez said neither of the two offers for Infowars were enough money given the scope of Jones' debts, and told the trustee to work to resolve some of the disputes between the creditors before making a new attempt to sell Infowars.

The Onion was named the winning bidder for Infowars in a November auction, but Jones and First American United Companies, the Jones-affiliated company, had argued the sale process was tainted because the Onion received too much credit for having the support of families that won large court verdicts against Jones.

Jones declared bankruptcy in 2022 and was forced to liquidate his assets to pay over $1.3 billion in legal judgments to the families of 20 students and six staff members who were fatally shot in the 2012 massacre at Sandy Hook Elementary School in Newtown, Connecticut.

Courts in Connecticut and Texas have ruled Jones defamed the families by making repeated false claims the mass shooting was staged as part of a government plot to take guns away from Americans.

Jones' attorney Ben Broocks told Lopez at a hearing on Monday that the Onion only put up half as much cash as the $3.5 million offer from First American United Companies, but boosted its bid with "smoke and mirrors" calculations.

The Connecticut-based Sandy Hook families, who are Jones' largest creditors, augmented the Onion's bid by agreeing to forgo some repayment from the Infowars sale so that other creditors could receive more money. That concession caused a bankruptcy trustee to value the Onion's bid at $7 million overall.

Chris Mattei, an attorney for the Connecticut-based Sandy Hook families, said the ruling was disappointing, but did not change the fact that Jones owes his clients huge sums of money.

"The families, who have already persevered through countless delays and roadblocks, remain resilient and determined as ever to hold Alex Jones and his corrupt businesses accountable for the harm he has caused," Mattei said.

Jones celebrated the verdict on Infowars.

The Onion's CEO Ben Collins said that the company was deeply disappointed in Lopez's decision, but remains interested in purchasing Infowars and making a "better, funnier internet".

The Onion had planned to re-launch Infowars in 2025 as a parody site filled with "noticeably less hateful disinformation" than before.

Christopher Murray, a court appointee trustee charged with selling Jones' assets, testified Tuesday that the auction was fair, and First American United Companies only complained about the process after learning that its bid was not chosen.

(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and Stephen Coates)