Gawker Media filed for bankruptcy protection on Friday, following a series of lawsuits that were secretly funded by billionaire venture capitalist Peter Thiel. In March, Gawker lost one of those suits to former professional wrestler Hulk Hogan, who was awarded a $140 million judgment after a jury ruled that the company had invaded his privacy by publishing his sex tape with his friend’s wife in 2012.
The New York-based media company submitted its paperwork to a U.S. bankruptcy court in New York after a Florida judge declined to issue a stay, which would have allowed Gawker to avoid immediately paying the judgment as it works on an appeal. FORBES first reported last month that early Facebook FB -0.07% investor and board member Thiel had been quietly helping to cover Hogan’s legal fees in an attempt to severely punish or perhaps bring an end to Gawker.
When asked about bankruptcy by FORBES in an interview earlier this month, Gawker CEO and founder Denton said that the company was considering “all its options.” Denton and his family still maintain majority control of Gawker Media. On Friday, the company announced that it entered into an asset purchase agreement with global media firm, Ziff Davis, though other bids may come in a bankruptcy court supervised auction. Multiple outlets reported that Ziff Davis had made an offer of less than $100 million for “seven media brands and other assets.”
“Even with his billions, Thiel will not silence our writers,” Denton tweeted. “Our sites will thrive—under new ownership—and we’ll win in court.”
A spokesperson for Thiel declined to comment.
The Chapter 11 filing should have little immediate impact on the company’s current operations though it adds another twist to a saga that has been full of them. In January, Gawker sold a minority stake to Russian billionaire Viktor Vekselberg and his Columbus Nova Technology Partners in anticipation for the lawsuit from Hogan, whose real name is Terry Bollea. This March, following a two-week trial, a jury awarded Hogan $115 million, an amount that was bolstered by an additional $25 million for punitive damages.
In May, FORBES discovered that Thiel had been bankrolling Hogan’s lawyers, who had filed at least three other lawsuits against Gawker since the beginning of the year. One of those lawsuits included a second on behalf of Hogan, who alleged extortion surrounding the publication of his sex tape.
Gawker filed for bankruptcy on Friday following the judge’s refusal to grant a stay. A person close to the company said that the filing allows the company to delay claims from any creditors and court judgments, giving Gawker time to restructure and hold off on paying Hogan and his lawyers. That person also said there are other potential bidders who will likely make offers in the coming months for the company.
Last month, Denton told FORBES that the company did not have the money to cover the judgment from the Hogan case. The company ended 2015 at breakeven on $50 million in revenue, and would have been profitable if not for legal fees. Denton said that the company has spent about $10 million in defending itself against the Hogan case alone. He also added that 2016 will also likely end up in the red due to legal fees.
It’s unclear what other buyers will come in for Gawker, though last month at a conference in Los Angeles, Denton was seen meeting with a senior vice president at Univision. It was reported earlier that Univision was looking to invest or possibly buy the company outright. “During the sale process, [Gawker] will maintain normal operations, publishing news and opinion on technology, politics and other interests to its 6 million readers each weekday, and providing advertisers with access to this desirable audience,” the company said in a statement. It also called the lawsuits funded by Thiel “a coordinated barrage.”
FORBES also reported that earlier this year a New York M&A lawyer contacted multiple former Gawker employees. That individual said he was representing a Silicon Valley billionaire who was interested in taking over Gawker. Some of those who were contacted suspected that Thiel was behind the effort. A spokesperson for Thiel declined to comment.
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