Gawker announced that it was filing for Chapter 11 Bankruptcy on Friday as a result of the $140 million jury verdict assessed by a Florida jury in the Hulk Hogan invasion of privacy lawsuit. A Florida judge upheld the verdict by denying a motion for new trial or reducing the monetary judgment by Gawker attorneys late last month.
According to the Wall Street Journal, the company will sell its assets in bankruptcy court and has received an opening bid of $90 million from Ziff Davis. The offer is though to set a “floor” for the bidding.
The bankruptcy filing halts any attempt for Hogan’s attorneys to realize the $140 million judgment by conceivably taking control of the company. Under bankruptcy protection, Gawker can continue to operate while raising money for appeals.
Payout Perspective:
Bankruptcy seemed like the only option for Gawker, the owners of Deadspin, Gizmodo and other popular sites. It appeared that during the trial, the judge indicated that any verdict should not bankrupt the company. Apparently, this was not the case. Chapter 11 is a form of bankruptcy taken on mostly by companies in extreme debt that may (or may not) reorganize in order to operate once again. For a recent example, sporting goods retailer The Sports Authority filed for Chapter 11 in March and is liquidating assets and closing stores in order to pay off debt. In the Gawker case, it does not look like Gawker in its current form will reemerge from Chapter 11. Rather, another media company will acquire the assets including Deadspin, et al. Thus, we haven’t seen the end of the actual web site companies. Of course, if Gawker prevails on appeal, we may see Nick Denton and A.J. Daulerio once again.
They felt the power of the pythons.