Why Johnson & Johnson’s Bankruptcy Is Still Alive . . . And InfoWars’ Isn’t

By: Donald L Swanson

Both the Johnson & Johnson and InfoWars bankruptcies are filed to address tort lawsuits.

Johnson & Johnson’s bankruptcy survives a motions to dismiss.[Fn. 1]  InfoWars’ bankruptcy doesn’t.[Fn. 2]

What follows is an effort to compare and contrast the two cases, revealing why one survives and the other doesn’t.

The Businesses

–Johnson & Johnson

Johnson & Johnson is a profitable, global supplier of health products, consumer products and pharmaceuticals.  It employs over 130,000 individuals, whose families are dependent upon continued successful operations.

–InfoWars

Alex Jones hosts a radio show that is syndicated across the United States and online.  His websites, InfoWars, NewsWars and PrisonPlanet, also promote his views.

The Lawsuits

–Johnson & Johnson

Johnson & Johnson has been selling baby powder products for decades. 

Cancer victims are suing Johnson & Johnson, claiming that talc used in its baby powder caused their cancer. 

At the time of its bankruptcy filing, Johnson & Johnson:

• is facing nearly 40,000 pending tort claims, with thousands of additional claims expected annually for decades to come;
• is expecting billions of dollars in talc-related liability and defense costs;
• has a history of 13 mesothelioma verdicts (since June of 2018) awarding $320.6 million in punitive damages and $155.2 million in compensatory damages—averaging $36.6 million per claim; and
• may have a total liability exposure >$15 billion for mesothelioma claims alone.

–InfoWars

Alex Jones and InfoWars are facing lawsuits in state courts, brought by relatives of the 2012 Sandy Hook shooting victims.  Their claims arise out of statements by Alex Jones and others in his organization that the Sandy Hook shooting was a “false flag” hoax.

Debtors describe the pending lawsuits as a “classic ‘race to the courthouse’” that precipitated their bankruptcy filings. The reality, however, is that the number of such lawsuits is fewer than ten, some of which have been ongoing for many years.

State courts have imposed multiple sanctions upon Alex Jones and his entities for their misconduct in litigation, resulting in a judgment on liability being entered against them by default.    

Bankruptcy filings by InfoWars entities occurred:

• shortly before a trial on damages was scheduled to begin; and
• shortly after a state court sanctioned Alex Jones for failing to attend his own deposition—and advised that trial would go forward in August.

Asset Transparency and Availability

–Johnson & Johnson

From the outset, Johnson & Johnson has been candid and transparent about:

• Using Chapter 11 to address the growing talc-related liability exposure and defense costs; and
• Using its corporate restructuring and bankruptcy filing to both, (i) continue operations, and (ii) resolve current and future claims equitably and efficiently.

The Bankruptcy Court declares that a fair resolution of this bankruptcy will include extraordinarily large contributions by the Johnson & Johnson corporate family and insurers.

–InfoWars

The bankruptcy Debtors are members of a larger enterprise controlled by Alex Jones.  Regarding the assets and businesses of that enterprise:

• all are owned by Alex Jones and his non-debtor companies; but
• there is no transparency about their assets.

Further, Alex Jones and his entities have agreed to advance some amount to the Debtors for plan payments, but:

• there is no transparency on how those amounts are determined; and
• there was no creditor involvement in that determination.

Accordingly, no one can tell whether Alex Jones and his entities actually have funds to satisfy the claims against them—that is a mystery.

In one lawsuit, for example, Alex Jones is accused of:

• drawing $18 million from his InfoWars company over three years, starting in 2018 when the defamation lawsuits begin; and
• claiming around that same time a “dubious” $54 million debt to another company he owns.

The bankruptcies appear to promote a scheme engineered to:

• limit the liability of Alex Jones and his entities;
• evade a full accounting of their assets; and
• prevent claimants from achieving a recovery on their claims.

Creditor Consents

–Johnson & Johnson

A plan of reorganization can be approved in this case only with consent of creditors.

The Chapter 11 process provides an efficient and effective process for getting such a plan negotiated and confirmed.

–InfoWars

Alex Jones and his entities attempt to use Subchapter V provisions to:

• achieve a confirmed plan without creditor consents and over creditor objections; and
• shield Alex Jones’s assets from the Sandy Hook plaintiffs.

Protecting Others

–Johnson & Johnson

The Bankruptcy Court finds that Debtor’s bankruptcy proceeding is the best forum for (i) addressing Debtor’s present and future talc claims, and (ii) ensuring a meaningful, timely, and equitable recovery for all claimants.

To that end, Debtor’s Chapter 11 bankruptcy will:

1. Maximize property available to satisfy creditors;
2. Ensure that all present and future tort claimants will share in distributions equitably; and
3. Dramatically reduce costs.

Moreover, the livelihoods of employees, suppliers, distributors, vendors, landlords, retailers are all protected by the bankruptcy filing.

–InfoWars

Debtors say they intend to pay the claims of Sandy Hook plaintiffs “in full.”  But the reality is no such thing.  That’s because:

• the amounts of plaintiff’s claim will not be established through litigation;
• instead, Debtors intend to force plaintiff’s claims into a claims estimation process, with an expedited bar date; and
• Debtors intend to cap distributions to Sandy Hook plaintiffs through that estimation process.

As explained by InfoWars’s attorney, “We’re turning to the bankruptcy courts to compel the plaintiffs to estimate the value of their claims in open court by discernible evidentiary standards.”

There is nothing about the bankruptcy process in this case that protects the interests of Sandy Hook plaintiffs. 

The only ones benefiting from these bankruptcies are Alex Jones and his entities, who seek to reap the benefits of chapter 11 without any of its burdens.

Corporate  Restructuring

–Johnson & Johnson

Johnson & Johnson engaged in a pre-bankruptcy corporate restructuring (shortly before filing) designed to, (i) keep its operations going, without subjecting those operations to the burden of bankruptcy, and (ii) maximize repayments to creditors—particularly cancer claimants.

The Bankruptcy Court finds:

• the rights of existing and future cancer claimants are not materially affected by the corporate restructuring; and
• the corporate restructuring and bankruptcy filing were not designed to gain a litigation advantage or hinder the claimants.

–InfoWars

Three days before filing the bankruptcies, Alex Jones:

• transferred his ownership interests in the Debtor entities into a settlement trust;
• entered into a plan support agreement for funding Debtors’ bankruptcy plan by Alex Jones; and
• assured that the bankruptcy Debtors have no assets and no adequate funding source.

Reasons for Bankruptcy Filings

–Johnson & Johnson

Debtor seeks these bankruptcy benefits:

• a breathing spell available under § 362;
• efficiencies in the claims allowance and estimation processes; and
• an opportunity to negotiate a global resolution to torrents of talc-related litigation, for both present and future cancer victims.

The Court finds:

• the bankruptcy is being used to bring accountability and certainty, not to escape liability;
• Johnson & Johnson’s assets have not been ring-fenced, concealed, or removed;
• no insider is to be released from liability, or their assets placed out of reach of creditors, absent a negotiated settlement under a plan;
• the interests 40,000 current claimants and the undetermined number of future injured parties (and families) can be protected in bankruptcy;
• the bankruptcy will not reward those who win the courthouse race; and
• the bankruptcy offers a meaningful opportunity for justice, with comprehensive, equitable, and timely recoveries for all injured parties.

All of this is good and proper.

–InfoWars

Debtors have no intent to reorganize a business or to preserve or maximize value for creditors—that‘s because Debtors have no businesses and no assets from which they earn any income.

Debtors insist that the bankruptcies are filed to avoid a “race to the courthouse.”  But such an explanation can’t be true because the group of Sandy Hook plaintiffs is small and because their claims have been on file for a long time.

The true reasons for filing Debtors’ bankruptcy proceedings appear to be:

• to gain tactical advantages in litigation;
• to minimize recoveries the claimants might achieve;  
• to shield the assets of Alex Jones and his entities from claims of Sandy Hook plaintiffs; and
• to shield Alex Jones and his entities from disclosure obligations.

All of these reasons are improper.

Conclusion

The comparison and contrasting information set forth above reveals why:

• Johnson & Johnson’s bankruptcy survives a motion to dismissal; and
• InfoWars does not.

——————

Footnote 1. Information in this article about Johnson & Johnson’s bankruptcy are taken from the Bankruptcy Court’s opinion denying motions to dismiss. The bankruptcy case is identified as In re LTL Management, LLC, Case No. 21-30589 in the New Jersey Bankruptcy Court. The said Bankruptcy Court opinion appears at Docket 184.

Footnote 2. The dismissal occurred on June 10, 2022 (see Doc. 114). Information in this article about InfoWars’ bankruptcy are taken from the U.S. Trustee’s Motion to Dismiss. The bankruptcy case is identified as In re InfoW, LLC, Case No. 22-60020 in the Southern Texas Bankruptcy Court. The said Motion to Dismiss appears at Docket 50.

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