Infowars lawyer, manager barred from bankruptcy case over conflicts
(Reuters) - A U.S. bankruptcy judge on Tuesday blocked a restructuring executive and an attorney from working for Infowars' bankrupt parent company over a conflict of interest, potentially throwing the bankruptcy case and the company's daily operations into disarray.
U.S. Bankruptcy Judge Christopher Lopez in Houston found that Marc Schwartz, chief restructuring officer of Infowars parent Free Speech Systems LLC, and attorney Kyung Lee failed to disclose that they sought work from Free Speech Systems before the conclusion of earlier Infowars bankruptcies.
The judge raised the conflicts issue because he presided over the earlier Infowars bankruptcies and was concerned about the apparent overlap of work. The judge said the two men showed a "lack of candor" regarding the overlap and other matters. The judge also said the problem was compounded by Schwartz's tendency to defer to Alex Jones and his other companies instead of advocating on behalf of FSS alone.
Lopez said that an independent trustee, instead of Schwartz, should investigate potential claims against Alex Jones and his companies.
Lopez acknowledged that his decision would cause disruption, but he said he could not trust Schwartz or Lee to impartially represent FSS if a conflict arose with Alex Jones or one of his other companies.
Lee did not immediately respond to a message seeking comment. Schwartz could not immediately be reached for comment. Both had told the judge they could fairly work on FSS' behalf.
FSS is seeking bankruptcy protection to resolve its liability for Alex Jones' false and defamatory claims that the 2012 Sandy Hook elementary school massacre was a hoax. A Texas jury awarded nearly $50 million in compensatory and punitive damages to the parents of slain 6-year-old Jesse Lewis, and a Connecticut trial is underway on the amount that must be paid to other Sandy Hook parents.
Lopez's decision leaves FSS's bankruptcy representation in question because its other attorney, Ray Battaglia, agreed only to serve as co-counsel.
"I can't do this on my own," Battaglia said in court.
The case is Free Speech Systems LLC, U.S. Bankruptcy Court for the Southern District of Texas, No. 22-60043.
For FSS: Ray Battaglia of the Law Offices of Ray Battaglia and R.J. Shannon of Shannon & Lee
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