Judge Rejects Sale of Infowars to The Onion
Judge Rejects Sale of Infowars to The Onion
“It seemed doomed almost from the moment they decided to go to a sealed bid,” Judge Lopez said. “Nobody knows what anybody else is bidding,” he added.
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Judge Lopez said that the bankruptcy auction failed to maximize the amount of money that the sale of Infowars should provide to Mr. Jones’s creditors, including the Sandy Hook families, in part because the bids were submitted in secret.
“It seemed doomed almost from the moment they decided to go to a sealed bid,” Judge Lopez said. “Nobody knows what anybody else is bidding,” he added.
So the problem is that it didn't maximise the potential income for the bankrupcy case?
Shouldn't that be a "oh well, sucks. but a sale is a sale" problem?
The market decided.
This can't be the first time the courts had to liquidate assets to pay for a civil suit, right? There must be an outline of some sort for them to follow?
Shouldn’t that be a “oh well, sucks. but a sale is a sale” problem?
"A sale is a sale" works fine when both sides to the transaction are well-informed and acting for themselves. When you are selling assets for someone else's benefit, you generally have extra obligations to them, because otherwise you don't really have an incentive to achieve a good price. So courts do generally have some oversight over sale of the assets of a bankrupt estate, to ensure that the trustee is not short-changing creditors just to get the job done quickly.
A complicating factor here is that the Sandy Hook families (who as far as I know are the large majority of the creditors) also supported the sale.
A complicating factor here is that the Sandy Hook families (who as far as I know are the large majority of the creditors) also supported the sale.
I assume there are other creditors who didn't?
AFAIK the damages paid to the Sandy Hook families were the sole reason he went bankrupt in the first place; without them he'd be profiting.
Apparently they also did not allow follow-up bids/outbidding others. It’s called a bankruptcy auction for a reason.
And there's a trustee for a reason. The debtors decided that the value of keeping Alex Jones away from InfoWars had its own value and were willing to accept a lower bid. There's no fiduciary duty to maximize the proceeds from the sale, and Alex buying back his own assets during a bankruptcy auction is actual fraud.
A first price sealed bid auction is a perfectly common type of auction.
It's functionally equivalent to an auction where you know the value of a thing (like we do a business being liquidated because the owner is in extremely deep unrelated legal debt), and the auctioneer starts by asking for the face value and then progressively lowers the ask until the first person accepts the price.
Instead of trying to get the lowest price possible, people are incentivised to start with their best offer for what they actually think the thing is valued. Allowing follow-up bids encourages people to low-ball and work their way up, which can reduce the price the seller gets for the item.Common in bankruptcy as well?
No idea, and not entirely sure why it matters. If your goal is to sell an asset and maximize proceeds, it's a known and unsurprising strategy, particularly since it gives higher returns when there are few bidders.
I think it has quite a chance of mattering. There's two choices here: the judge is incomptetent/compromised, or there's a reason this makes sense within the bankruptcy context. I want to explore the latter first before I make any judgements.
The underlying reason for the bankruptcy is bigger than dollars. Avoiding selling infowars to some other conservative shitheads to continue the harassment of Sandy Hook victims is far more important than dollar signs.
This was not a typical bankruptcy auction, and part of the trustee’s role was to ensure an outcome that was acceptable to those injured by Jones, eg the Sandy Hook families.
https://en.wikipedia.org/wiki/Vickrey_auction
There are numerous formats of auction. I don't think a Vickrey auction is what they did, but it is an example of a sealed auction format that is well supported as legitimately and efficiently maximizing value for the seller.
So it's unfortunately not actually a sale until the judge approves it, it's just an accepted bid.
Sorta like when buying a car. The salesman tells you the price for the vehicle, overpriced perks, and how much your trade in is worth, and you accept the final price. Then the salesman has to get the floor manager to agree, which they always do, because they're the ones with authority to approve the sale. Then you can sign the paperwork and exchange money and you've actually processed the sale. Until then either party can walk away for any reason.In this case, it's like the floor manager rejected the sale because the cash part of the sale price was less than MSRP, and they didn't think the trade in value mattered.
It's not common for the sale to get rejected, and it's even weirder for them to reject "not cash" instead of paying attention to value.The judge saying the estate can't accept debt forgiveness in lieu of cash is just odd, since it reduces the debt more than the cash would.
It wasn’t rejected because the judge thought it wasn’t the highest value among the bids; it was rejected because the judge thinks the auction should’ve asked for follow-up bids
It’s up to the lender to accept the settlement. They’re the ones taking the loss. The sale is not the result of financial hardship, so the court cannot force the lender to accept an unreasonably insufficient buyout offer for the loan.
What loan?
they mean creditor
Whatever gets the sandy hook families the money they deserve.
They wanted the sale to go to the Onion and not some conservative hate group more than the money. They were fully on board with taking the lower amount.
There’s a legal eagle vid that explains the math:
I’m no lawyer, but is that how these things work? The state is selling the company to pay a debt. The family owns the debt, not the company. They don’t get to decide how much value gets generated from the sale of the company. So it’s the states duty to maximize the proceeds.
The estate has a duty to maximize the value of the liquidation, and pay back creditors as best it can. Specifically to settle the debts.
While a creditor can't dictate the value of the estate, they can offer to forgive debt, which is the same for the purposes of the estate.
If the cancelled debt would have been worth more than the cash, then the creditors would be rightfully furious if the state instead sold the asset for less cash and paid them that way.
If you owe me $50k, and I tell you your watch is worth $5k to me, and instead you sell it for $250 and give me that while declaring bankruptcy so I don't get anything else, that's a terrible outcome for me, and great for you if you sold the watch to your friend who then gave it back to you in exchange for $250 later.
Yes, it is more complicated than just money.