“It seemed doomed almost from the moment they decided to go to a sealed bid,” Judge Lopez said. “Nobody knows what anybody else is bidding,” he added.
Judge Lopez said that the bankruptcy auction failed to maximize the amount of money that the sale of Infowars should provide to Mr. Jones’s creditors, including the Sandy Hook families, in part because the bids were submitted in secret.
“It seemed doomed almost from the moment they decided to go to a sealed bid,” Judge Lopez said. “Nobody knows what anybody else is bidding,” he added.
So the problem is that it didn’t maximise the potential income for the bankrupcy case?
Shouldn’t that be a “oh well, sucks. but a sale is a sale” problem?
The market decided.
This can’t be the first time the courts had to liquidate assets to pay for a civil suit, right? There must be an outline of some sort for them to follow?
The market did not decide, given the bids were secret.
No, that’s actually still the market deciding. It’s a perfectly standard type of auction that discourages low-ball bids. Bidding is secret, you only get one bid, and you don’t know who or if anyone else is bidding.
If you want it, you make your best offer for what you’re willing to pay for it, and if someone else bid more they get it. If you would have been willing to pay more with more rounds of bidding, you should have bid that from the start.Open-bid auctions get better prices for sellers when there are a lot of bidders, and better prices for buyers when there are few. Given there were two bidders, it’s fair to seek the most either party will bid, rather than seeking $1 more than the maximum the loosing party will pay.
Thing is, starting with lowballing (high in a market’s case) and then getting into a price war is exactly how a market decides things. I get what you mean, but I also agree that the market is equivalent to open-bid.
Shouldn’t that be a “oh well, sucks. but a sale is a sale” problem?
“A sale is a sale” works fine when both sides to the transaction are well-informed and acting for themselves. When you are selling assets for someone else’s benefit, you generally have extra obligations to them, because otherwise you don’t really have an incentive to achieve a good price. So courts do generally have some oversight over sale of the assets of a bankrupt estate, to ensure that the trustee is not short-changing creditors just to get the job done quickly.
A complicating factor here is that the Sandy Hook families (who as far as I know are the large majority of the creditors) also supported the sale.
A complicating factor here is that the Sandy Hook families (who as far as I know are the large majority of the creditors) also supported the sale.
I assume there are other creditors who didn’t?
AFAIK the damages paid to the Sandy Hook families were the sole reason he went bankrupt in the first place; without them he’d be profiting.
So it’s unfortunately not actually a sale until the judge approves it, it’s just an accepted bid.
Sorta like when buying a car. The salesman tells you the price for the vehicle, overpriced perks, and how much your trade in is worth, and you accept the final price. Then the salesman has to get the floor manager to agree, which they always do, because they’re the ones with authority to approve the sale. Then you can sign the paperwork and exchange money and you’ve actually processed the sale. Until then either party can walk away for any reason.In this case, it’s like the floor manager rejected the sale because the cash part of the sale price was less than MSRP, and they didn’t think the trade in value mattered.
It’s not common for the sale to get rejected, and it’s even weirder for them to reject “not cash” instead of paying attention to value.The judge saying the estate can’t accept debt forgiveness in lieu of cash is just odd, since it reduces the debt more than the cash would.
It wasn’t rejected because the judge thought it wasn’t the highest value among the bids; it was rejected because the judge thinks the auction should’ve asked for follow-up bids
Follow the money
Apparently they also did not allow follow-up bids/outbidding others. It’s called a bankruptcy auction for a reason.
And there’s a trustee for a reason. The debtors decided that the value of keeping Alex Jones away from InfoWars had its own value and were willing to accept a lower bid. There’s no fiduciary duty to maximize the proceeds from the sale, and Alex buying back his own assets during a bankruptcy auction is actual fraud.
A first price sealed bid auction is a perfectly common type of auction.
It’s functionally equivalent to an auction where you know the value of a thing (like we do a business being liquidated because the owner is in extremely deep unrelated legal debt), and the auctioneer starts by asking for the face value and then progressively lowers the ask until the first person accepts the price.
Instead of trying to get the lowest price possible, people are incentivised to start with their best offer for what they actually think the thing is valued. Allowing follow-up bids encourages people to low-ball and work their way up, which can reduce the price the seller gets for the item.Common in bankruptcy as well?
No idea, and not entirely sure why it matters. If your goal is to sell an asset and maximize proceeds, it’s a known and unsurprising strategy, particularly since it gives higher returns when there are few bidders.
I think it has quite a chance of mattering. There’s two choices here: the judge is incomptetent/compromised, or there’s a reason this makes sense within the bankruptcy context. I want to explore the latter first before I make any judgements.
The underlying reason for the bankruptcy is bigger than dollars. Avoiding selling infowars to some other conservative shitheads to continue the harassment of Sandy Hook victims is far more important than dollar signs.
https://en.wikipedia.org/wiki/Vickrey_auction
There are numerous formats of auction. I don’t think a Vickrey auction is what they did, but it is an example of a sealed auction format that is well supported as legitimately and efficiently maximizing value for the seller.
This was not a typical bankruptcy auction, and part of the trustee’s role was to ensure an outcome that was acceptable to those injured by Jones, eg the Sandy Hook families.
Whatever gets the sandy hook families the money they deserve.
They wanted the sale to go to the Onion and not some conservative hate group more than the money. They were fully on board with taking the lower amount.
There’s a legal eagle vid that explains the math:
I’m no lawyer, but is that how these things work? The state is selling the company to pay a debt. The family owns the debt, not the company. They don’t get to decide how much value gets generated from the sale of the company. So it’s the states duty to maximize the proceeds.
The estate has a duty to maximize the value of the liquidation, and pay back creditors as best it can. Specifically to settle the debts.
While a creditor can’t dictate the value of the estate, they can offer to forgive debt, which is the same for the purposes of the estate.
If the cancelled debt would have been worth more than the cash, then the creditors would be rightfully furious if the state instead sold the asset for less cash and paid them that way.
If you owe me $50k, and I tell you your watch is worth $5k to me, and instead you sell it for $250 and give me that while declaring bankruptcy so I don’t get anything else, that’s a terrible outcome for me, and great for you if you sold the watch to your friend who then gave it back to you in exchange for $250 later.
Yes, it is more complicated than just money.
It’s up to the lender to accept the settlement. They’re the ones taking the loss. The sale is not the result of financial hardship, so the court cannot force the lender to accept an unreasonably insufficient buyout offer for the loan.
What loan?
they mean creditor
It’s crazy how if you’re rich you can just nullify any law or legal precedent to get your way. Elons goings to own infowars now
"I could stand in the middle of 5th Avenue and shoot somebody, and I wouldn’t lose any voters. It’s, like, incredible.”
(this is a joke) To be fair I can make the exact same claim. I could murder someone and the number of votes I receive yearly will not be impacted.
Shoot an insurance ceo and your votes will go up.
what if he’s secretly ✨luigi✨
Note that this doesn’t mean InfoWars gets sold to anyone (including the company affiliated with Jones). It means that everyone has to re-bid.
Right and now the parents, who already said they were satisfied with the offer, can watch as it gets sold right back to the shitheads who caused the lawsuit to happen in the first place. Either that or those shitheads can bid some outrageously high number that either guarantees them ownership or guarantees the parents must forgive a much larger portion of the debt so that someone else like the Onion can own it.
Either way the parents are facing a worse outcome now.
Sounds like the judge got a pay day.
He will be named secretary of something random under tRump
Journalism, probably
Undersecretary for auction integrity
Undersecretary is someone working when the secretary is giving a speech, Police Academy style?
Fuck Judge Lopez for caring more about money than justice.
It’s technically the law. Bankruptcy procedures are geared to enable the return of the maximum amount of proceeds for the creditors.
Sealed bid kind of torpedos that I suppose, but considering the shit stain on history that Infowars is, I feel like an exception should have been made here.
Sealed buds are usually better for that.
https://www.investopedia.com/terms/s/sealed-bid-auction.asp
Each party is incentivised to make the highest offer they’re willing to pay from the beginning, as opposed to negotiating the best price they can get.
Additionally, the families forgiving a significant amount of money as part of the bid should factor in, since the responsibility of the estate is to get the best deal, not the most cash.
Problem is why did that auction even happen or rather was allowed if it was technically now allowed for a bankrupcy case?
Feels like intentional so they can go “well, we don’t like the winner. time to revoke it”
Apparently Jones chose a sham for his trustee who decided how to run the auction
Edit: “sham” as in how Jones saw it. After receiving only 2 bids, Murray—the trustee—decided to only solicit best and final offers instead of following the original open auction procedure; the court didn’t expect changing those rules, but the change was completely within the trustee’s power. Though both bidders had no objections to the changed rules, the lost bidder and Jones did after the results came out and sued, and the court felt like Murray should’ve done something else (while clarifying that they felt Murray acted in good faith).
Sealed bids encourage last and best offers, and prevent the deepest pockets from submitting a “highest plus one” bid that minimizes the proceeds from the sale.
This judge is either a dipshit or corrupt.
It’s technically the law
The article says “the potential for an additional $1 million was not worth the risk of increased costs to the estate”. I don’t think that’s the case here.
He cares about money alright. The deposit he got from interesting parties before making this decision.
He would never accept a deposit from the interested parties before making this decision. That would be a bribe, and extremely illegal.
He will accept his deposit from the interested parties after making the decision. That is a gratuity, and is now totally legal, thanks to SCOTUS.
No fun allowed
Most bids are sealed. Go bid on any construction job they are sealed. One bidder has no clue what anyone else bid. What the fuck corrupt judge is what they got there.
And they are interviewing retired bankruptcy judges that are apparently at a loss right now.
link pls
Sorry it was on NPR in the morning. They had someone saying that it was a perfectly standard sale and were surprised by the decision.
Bruce Markell, a former U.S. bankruptcy judge and now Northwestern law school professor, said the judge’s decision was shocking and disappointing.
“It seems that the good was held hostage to the better,” Markell said, and now “the costs of dealing with an obstreperous debtor [Jones] just keep mounting.”
don’t see the “perfectly standard” part tho. maybe he felt it could be argued to have a potentially better deal but didn’t think it warranted overturning the sale.
obstreperous adjective
ob·strep·er·ous1: marked by unruly or aggressive noisiness : clamorous
obstreperous merriment
an obstreperous argument2: stubbornly resistant to control : unruly
obstreperous behavior
an obstreperous childmaybe he felt it could be argued to have a potentially better deal but didn’t think it warranted overturning the sale.
Well that was my post day paraphrase lol. Glad you found it.
WHAAAAAT?
Microsoft can buy Blizzard for $46 billion but one website can’t buy another website for $7 million. (Probably because Freedom!)
Good watch to explain why the Judge is a dick.
Seems like they could have avoided this by having the Sandy Hook families join the bid with an arbitrarily high dollar amount—which they’d immediately get back as creditors.
That’s essentially what they did. They chose an auction type where each party offers as much as they’re willing to pay and the highest offer wins. The Sandy Hook families included a chunk of their debt in the offer which was part of the value.
I think Abou meant bidding with cash instead of debt.
That’s disappointing.
