Saturday, April 23, 2022

Alex Jones: The Bankruptcy Prequel

 While Alex Jones has created a lot of controversy through his decision to play three of his entities into voluntary bankruptcy, this was not his first brush with bankruptcy. In 2020, his ex-wife, Kelly R. Jones, initiated an involuntary bankruptcy petition against him. In re Jones, Case No. 20-10118 (Bankr. W. D. Texas). Ms. Jones filed the petition pro se, meaning that she did not have a lawyer. The case was dismissed after the bankruptcy court determined that Ms. Jones was not an unsecured creditor. Only unsecured creditors are entitled to bring involuntary bankruptcy petitions. The Bankruptcy Court determined that Ms. Jones's claim of $786,861 was secured by property worth at least $1,250,000. (Dkt. #92). Although Mr. Jones could have sought to recover his legal fees incurred in defending against the petition, he did not.

According to the bankruptcy filings, Mr. Jones owns at least two properties since they were pledged to Kelly Jones in the divorce. One of these properties, 5420 McCormick Mountain Dr., Austin, TX 78734 is a waterfront property with a modest 1.578 sq. ft. residence on it.  According to Zillow, the property is currently worth $2.2 million. However, if it is Mr. Jones's homestead, it would be exempt from claims of creditors. Mr. Jones also owns a 5.01 acre tract in Perdernales Hills Ranch in Blanco County, Texas. This property is appraised by the Blanco County Appraisal District at $137,270, although tax appraisal values generally lag behind market value. 

The address given for Mr. Jones in the bankruptcy proceeding was 1400 Barton Creek Boulevard, Austin, TX 78735. This property is owned by RXXCTTGAA Trust and is valued by the Travis Central Appraisal District at $2.7 million. The trust acquired the property in 2015. The summons on file with the Bankruptcy Clerk indicates that Mr. Jones was served with the summons at this address. 

In one bit of foreshadowing, Ms. Jones used the involuntary bankruptcy petition as the basis for removing the couple's divorce case to U.S. District Court.  Case No. 1:20-cv-151-LY, Jones v. Jones (W.D. Texas). The case was remanded back to state court. In in irony (or perhaps simply a common refrain of an unsuccessful litigant), Ms. Jones complained about the Travis County State District Court's "repeated denial of [her] equal rights to offer and present evidence in Court and its intentional, arbitrary, irrational and unjustified denial of equal access to the court."  Mr. Jones has made similar statements about his treatment in the Travis County District Courts of late. 

What does this mean for the present Jones-related bankruptcy cases? Nothing directly, although it illustrates that bankruptcy can be used as both a sword and a shield. Ms. Jones unsuccessfully attempted to bring her ex-husband into bankruptcy to gain an advantage in their post-divorce relationships. Mr. Jones is now seeking to use bankruptcy to shield several of his entities from claims and remove pending litigation to federal court. The one distinction between the two filings is that Ms. Jones was acting pro se while Mr. Jones is represented by qualified attorneys. In a proceeding as complex as bankruptcy, having qualified counsel minimizes the risk that a litigant will jeopardize their case through lack of knowledge of the procedure. 

Disclaimer: My sources for this post consist of publicly available records. I do not claim any personal knowledge of the facts beyond what I have found in these records. 


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