Bankruptcy judge rejects The Onion’s bid to buy Alex Jones’ Infowars
Bankruptcy judge rejects The Onion’s bid to buy Alex Jones’ Infowars
The ruling dashed, at least for now, the plans of The Onion’s parent company to take over Infowars and radically shift its content.
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“I don’t even think the $3.5 million is enough,” [the judge] said.
Cool judge, so you gonna put up the cash? Because last I checked there were only two bidders and the victims wanted the Onion out of the two.
Not only did they want them, the onion agreed to pay more to another lawsuit filed by a different group of parents than would have been given by the second bidder. This wasn't the highest amount bid, but the highest payout to families.
I've been following this closely.
The normal way bankruptcy auctions go is basically some version of this:
- Everyone who wants to bid has to sign an NDA about the assets.
- Everyone who signs the NDA can perform their due diligence, look at financial statements and other confidential information about the assets in the auction, to figuratively kick the tires. If there's actual physical property involved, bidders are generally allowed to physically inspect it (if it's a tractor, for example, you can bring a mechanic to help sort out the tractor's condition).
- Before the deadline, every bidder submits a secret bid to the trustee.
- The trustee evaluates the bids, looks to see which is best, and decides whether the top bids are close enough to hold a live public auction or allow topping bids for the bidders to say "hey you're only $1 million short from the current top bid, you want to throw more money at this?," and going around and around until the trustee is sure they've gotten the best and final bid from everyone.
The judge is upset that the trustee didn't really do step 4, which in the bankruptcy process is designed to squeeze out the highest possible price for the sale. The losing bidder says they submitted a lower bid than their absolute top "best and final" they would have, because they thought they'd have an opportunity to improve the bid in a step that never happened.
So they're going back to do it again. Presumably the trustee will propose a new auction process that explicitly puts out well defined rules on how creditors (like the Sandy Hook families) can credit bid with credit against their own claims, instead of actual cash. They'll need to calculate exactly how much each dollar of credit bid brings to the non-participating creditors (like Sandy Hook families who don't want to credit bid), and make sure that for each creditor who isn't credit bidding gets the most money out of the sale.
I don't think it's over. The judge specifically said that he believes the trustee tried to do the right thing, but ultimately didn't follow a process that was designed to raise the most money.
He thinks they didn't do enough to get more from the bidding. The point of this bankruptcy option is not to punish Jones, it's to liquidate his assets to pay creditors. The job of the person selling those assets is to get as much money as they can for those creditors.
So if the creditors stated they want the desk with the onion... Why not?
Law is 90% like process (number made-up). You need to follow the same process for everybody. You follow the same process and nobody sues later claiming "I was mistreated". This is an entirely reasonable decision by the judge.
But this is not what happened.
but he said the trustee did not run a transparent process and should have given a rival bidder associated with Jones another chance to improve its bid.
They are not telling the onion to offer more money, they are giving the one with the highest bid the chance to make it even bigger.
This is highly unusual to be honest. But it was unusual from the beginning.
They are not telling the onion to offer more money, they are giving the one with the highest bid the chance to make it even bigger.
No, the Jones-affiliated bidder had a smaller bid, but should've been given the opportunity to try to outbid the then-highest bid from the Onion.
Basically the judge said that the trustee, as auctioneer, should've gotten the two bidders into a bidding war to maximize the price.
A rival bidder associated with Jones, First United American Cos., offered $3.5 million in cash, or twice as much cash as The Onion’s parent company. First United American is a limited liability company affiliated with Jones’ dietary supplements business, and its bid had Jones’ blessing.
The Jones one was the largest of the two, but the onion was favored by the families
The value of the Onion's bid was $7 million ($1.75 million in cash, $5.25 million in credit), when you include the credit bids from the families. That's where you're getting tripped up in trying to understand what the court was ruling.
No, there was no 5.25 in credit. I'm happy to see any source for that claim though.
There was some future payments promised and a better than usual split for some families, so they "valued" the bid at 7 million.
a better than usual split for some families
That is exactly what counts as credit in this case, because this split is made possible by some other families crediting the bid. Basically writing "i dont want this money give it to someone else" on a figurative piece of paper and bidding with that instead of cash.
So even with that definition, there was no 7 millions anywhere. Thanks
There was some future payments promised
It's not future payments promised. Just a division of who to split the proceeds with. And so for the typical creditor who didn't credit bid, The Onion's bid was worth the equivalent of a $7 million cash bid, and therefore was more valuable than the Jones affiliates' $3.5 million cash bid.
It's just math. The Onion bid was higher, and the judge said that the losing bid should've been given an opportunity to improve the bid to get a chance to win, and maybe raise even more money.
Murray valued it at that amount, it didn't have that real value. Even future payments were a percentage of profits and but not guaranteed.
That equivalence is only theoretical, not real. If you think they can write "it's 7 million but I let you hav 5.75, then we can have the bid at 99 trillions! Why not? They can just say they only Want 1.25.
They are not telling the onion to offer more money, they are giving the one with the highest bid the chance to make it even bigger.
It doesn't sound like that's happening - just that they should have known about what was happening more.
Honestly the reporting on this sucks. We'll need to wait for some legal commentators to weigh in on how unusual or standard this is and what happens next.
A rival bidder associated with Jones, First United American Cos., offered $3.5 million in cash, or twice as much cash as The Onion’s parent company. First United American is a limited liability company affiliated with Jones’ dietary supplements business, and its bid had Jones’ blessing.
The reporting is OK, you need to read past the headline
Piss off? I read the rest of the article. In fact it says this:
It was not immediately clear whether there would be a new auction in which The Onion could bid again for Jones’ assets. Lopez said he would leave the decision about what to do next in the hands of the trustee, Christopher Murray, who had overseen the auction.
That is a far cry from
they are giving the one with the highest bid the chance to make it even biggerby a long shot.So no need to be weirdly aggressive about my reading skills. The reporting so far is thin and being done by reporters who don't know the law enough about what happens next.