Infowars host Alex Jones must pay the parents of a Sandy Hook shooting victim $4.1 million in damages.
During his defamation trial, Jones said any damages over $2 million would "sink" his business.
Legal experts told Insider that the argument is common, and bankruptcy could give Jones less control over Infowars.
After a Texas judge ruled that conspiracy theorist Alex Jones must pay the parents of a Sandy Hook shooting victim $4.1 million in defamation damages, the financial health of his channel Infowars is set to be tested.
On Thursday, the judge awarded the parents significantly less damages than the $150 million they were seeking, though higher punitive damages could still follow. During the trial, Jones testified that any damages awarded over $2 million would "sink" his channel — despite financial data that was presented showing the channel raked in close to $800,000 a day.
Jones had sought bankruptcy protection last week. His company, Free Speech Systems, which operates Infowars, filed for bankruptcy on Friday, halfway through the trial.
Legal experts told Insider that the strategy is not uncommon, but that it might not shield Jones from having to pay out the full defamation damages and face long-term consequences.
"Jones may not be able to make the judgment go away by claiming bankruptcy," Neama Rahmani, a trial lawyer and former federal prosecutor, told Insider. "Generally speaking, judgments stemming from intentional acts like defamation aren't dischargeable in bankruptcy."
Filing bankruptcy can shield you from debt collectors and delay the immediate collection of damage payments, but it largely depends on how the bankruptcy proceedings go. Given his high profile and propensity for lying, there will likely be a lot of scrutiny on Jones, the legal experts said.
"You have to truly be in bankruptcy. You can't just say, 'I'm bankrupt,'" Joshua Ritter, a criminal attorney based in Los Angeles, told Insider. "It goes through a hearing process and a judge decides what, if anything, you are worth, who you have to pay."
He added: "They keep an eye on you too. It's not like you can declare bankruptcy and the next day start making millions again and keep that all to yourself."
Jeff McFarland, a Los Angeles-based trial attorney specializing in defamation cases, told Insider that Jones may try exactly that — and the parents who sued him could also be involved in the bankruptcy proceedings as well.
"I've had cases where they filed bankruptcy on the morning that I was supposed to give opening statement because they were afraid they were gonna lose more than their company was worth, and it stayed all proceedings," McFarland told Insider. "The bankruptcy court is trying to figure out a way to keep the business afloat, not put people out of work — but in this particular case — if he bankrupts the business, he could start another one the next day that has a different name. I mean, Alex Jones is Infowars."
McFarland added that Jones could face a different wrath going that route, having his business in part owned by — or dissolved by — the parents who sued him.
"If there's a large creditor that comes forward in this case, the family or someone else may be able to take over the business in bankruptcy as the number one creditor," McFarland said. "They could take the assets, the business, the name, what it does, and they could shut it down as they see fit — you can lose control of your business. It can be a dangerous move."
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