Earlier this month, satirical news site The Onion purchased InfoWars, the website previously owned and operated by conspiracy theorist Alex Jones, in a bankruptcy auction. However, the sale has been now been temporarily halted until a federal judge can hold an evidentiary hearing to review appeals from Jones and another bidder reportedly linked to him. What’s more, lawyers for Elon Musk’s X Corp. have notified the court that the social network was reserving its rights to the sale of accounts associated with Jones.
As reported by The Associated Press, Bankruptcy Judge Christopher Lopez decided on Monday to delay a ruling on an emergency motion to disqualify The Onion’s bid until either December 9th or 17th. During the hearing, the judge will take arguments on Jones’ allegations of fraud and collusion in the bankruptcy auction, as well as trustee Christopher Murray’s denial of those accusations.
“I want a fair and transparent process and let’s just see where the process goes,” Lopez said. The hearing could result in several outcomes, including the judge approving the purchase, ordering a new auction, or naming another bidder as the winner.
As The New York Times points out, Musk’s attorneys are not intervening in the sale, but rather contesting the potential transfer of X handles. According to Musk’s legal team, X’s terms and conditions make it clear that users don’t actually own their accounts and thus can’t sell them off.
The attorneys cited as part of their argument a recent case involving Vital Pharmaceuticals, which found that a bankruptcy estate owned the social media accounts created by a former executive.
There would be a major legal implication if Musk wins his challenge, potentially allowing him to halt the sale of X handles when a company is sold.
Jones was forced to file for bankruptcy and liquidated his assets after losing a $1.4 billion defamation lawsuit filed against him by victims’ families of the 2012 Sandy Hook shooting.
First United American Companies, which is associated with Jones’ dietary supplements store, was the only other bidder in the auction and challenged the results, claiming it bid twice as much cash as The Onion.
It’s been reported that First United put in a $3.5 million sealed bid, while The Onion submitted $1.75 million in cash. However, The Onion’s bid involved a pledge from the Sandy Hook families to forgo a portion of the auction proceeds to give other creditors more than they would receive under other bids.
The auction process, which was approved by Lopez, did not require Murray to go with the highest bidder and also gave him leeway to reject any bid that was “contrary to the best interests” of creditors.
Indeed, Murray said in a previous court hearing that creditors were “significantly better off” with The Onion’s bid.