NEW YORK, June 14 (Reuters) - A U.S. bankruptcy judge on

Friday ordered a court-supervised liquidation of conspiracy

theorist Alex Jones' personal assets, but he dismissed the

bankruptcy of Jones' company Free Speech Systems without

ordering it to be liquidated.

U.S. Bankruptcy Judge Christopher Lopez appointed a

Chapter 7 trustee to sell Jones' assets, including his ownership

stake in Free Speech Systems, the parent company of his Infowars

website. Proceeds would go to pay Jones' creditors, relatives of

20 students and six staff members killed in the 2012 mass

shooting at Sandy Hook Elementary School in Newtown,

Connecticut.

But Lopez declined to force Infowars itself into a

separate liquidation, instead saying at a court hearing in

Houston, Texas that Jones could continue to run the company

until the trustee sells his ownership stake.

Lopez rejected an argument by some of the Sandy Hook

families that Jones should not be allowed to regain control of

his company. The judge said the bankruptcy court's supervision

had never impacted Jones' broadcasts.

"There's been lots of talk about whether Mr Jones has

regained control of the business, but the reality is he never

really lost it," Lopez said.

The split ruling will mean further litigation between

Jones, his company, and the Sandy Hook families, including

battles over $6 million in cash held by Free Speech Systems. The

families also will continue trying to collect money that Jones

kept from them by sending it to his wife and father and close

associates.

The proposed liquidation of Free Speech Systems split

the Sandy Hook families. Families who sued Jones in Connecticut

argued that an immediate shutdown would prevent him from hiding

the company's cash or working to undermine the company from the

inside. Families who sued Jones in Texas argued instead that he

would pay more in the long run if he kept control of his

business instead of "selling it for scraps."

"You can't control Alex Jones," said Avi Moshenberg, an

attorney for the Texas families. "What you can do, what the law

allows, is to make Alex Jones and Free Speech Systems pay on the

judgments that were rendered by juries."

Jones' attorney, Vickie Driver, said the Connecticut

families wanted to override Jones' First Amendment right to free

speech. Even forcing Infowars into liquidation "doesn't stop Mr.

Jones from saying what he wants, when he wants, on his

broadcast," Driver said in court.

Chris Mattei, an attorney for the Connecticut families,

said after the ruling that it was a "good day," and said that

Infowars is "soon-to-be defunct."

"Alex Jones is neither a martyr nor a victim," Mattei

said. "He is the perpetrator of the worst defamation in American

history."

Lopez appeared to fight back tears at one point in his

ruling, after pointing out the painful irony of deciding the

fate of Infowars just before Father's Day. Lopez said he "had no

words" to describe the pain of losing a child.

"I wish I would have picked a better day," Lopez said.

Lopez deferred decisions on some demands by the Sandy Hook

families, who have sought control over Jones' social media

accounts and the ability to choose the trustee who will be

responsible for collecting assets from Jones to pay some of the

$1.5 billion in defamation judgments that courts have awarded to

the families. Those decisions can be made later, Lopez said.

Jones filed bankruptcy protection 17 months ago, but he was

unable to reach a settlement that would reduce the $1.5 billion

he owes to the Sandy Hook families after courts in Connecticut

and Texas ruled that he defamed them with repeated false

statements about the massacre.

Jones claimed for years that the Sandy Hook killings were

staged with actors as part of a government plot to seize

Americans' guns. Jones has since acknowledged that the shooting

occurred.

The judge overseeing Jones' bankruptcy has ruled that most

of the debt will survive after a liquidation, because it

resulted from "willful and malicious" conduct.

(Reporting by Dietrich Knauth; Editing by David Gregorio and

Alexia Garamfalvi)