AUSTIN, Texas — A federal bankruptcy judge, overseeing the case of conspiracy theorist Alex Jones, has declined a proposed settlement from the families of the Sandy Hook Elementary School shooting victims.

This ruling adds complexity to the potential sale of Jones’ Infowars platform, which could further divide the families who successfully sued Jones for nearly $1.3 billion in Connecticut and those who were awarded $50 million in Texas courts. The intended settlement was designed to clarify how the families would distribute $16 million in liquid assets.

Under the suggested agreement, families from Texas would receive $4 million upfront, plus 25% of any funds collected over $12 million designated for the families in Connecticut. This arrangement could enable some Texas families to potentially gain up to $480 million from Free Speech Systems, the parent company of Infowars.

Jones claimed the settlement aimed to dismiss his appeals against the judgments.

During a hearing on Wednesday, U.S. Bankruptcy Court Judge Christopher Lopez from the Southern District of Texas stated that the families and Chapter 7 trustee Christopher Murray could either attempt to resolve their issues in state court or present another settlement proposal.

This denial marks yet another development in Jones’ ongoing bankruptcy proceedings, which have thus far resulted in the auctioning of Free Speech Systems and its assets to help pay off the nearly $1.4 billion in damages owed to the Sandy Hook victims’ families. The tragic shooting claimed the lives of twenty children and six staff members.

Chris Mattei, a lawyer representing the Connecticut families, issued a statement on Wednesday affirming that “whatever course the families decide to pursue next, their resolve to recover every dollar of the judgments against Alex Jones remains unwavering.”

Judge: ‘I’m no longer permitting a sale of the assets’

Jones was found liable for defamation by judges in both Texas and Connecticut after he leveraged his platform to disseminate false claims that the shooting was fabricated and that the families were “paid crisis actors.”

In September, Judge Lopez ordered an auction for the assets. In November, he announced that a joint bid made by the satirical site The Onion and the Connecticut families had emerged as the winning bid. First United American Companies, connected to Jones, was identified as the backup bidder.

However, in December, Lopez halted that joint bid, criticizing the auction for its unfairness and lack of transparency, questioning the validity of the joint bid. Since then, First United American Companies has significantly increased its original offer of $3.5 million for Infowars’ assets.

On Wednesday, Lopez informed Murray that he is no longer permitted to sell Infowars’ assets and has invalidated the initial auction order laid out in September. Murray and the families had attempted to cite this order to file claims against Free Speech Systems, but Lopez clarified that the order had already fulfilled its purpose.

Murray is now limited to selling only the equity of Infowars.

“I’m no longer allowing the assets to be sold—only the pure equity sale,” Lopez stated. “This case continues to evolve with unexpected twists and turns, showcasing a lot of creative legal maneuvering. However, at its foundation, it’s something I cannot endorse. I am doing what I believe is my duty and job after a thorough analysis of the law. Therefore, I’m unable to approve this.”

Lopez also noted that since the bankruptcy case of Free Speech Systems was dismissed last year, any conflicts with the company can no longer be addressed in his court but must be taken to state court.

Previously, Lopez expressed his desire for the case, which has stretched over more than 2½ years, to be concluded by 2025. However, the future of Infowars’ equity remains uncertain.

Contributing: Reuters