Gawker Media Friday filed for Chapter 11 bankruptcy in New York.
The media company, known for blogs like “Jezebel” and “Deadspin,” had assets of $50 to $100 million and liabilities of $100 million to $500 million, filings showed.
CHAPTER 11 BACKGROUND:
A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a “reorganization” bankruptcy.
An individual cannot file under chapter 11 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court, or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d)-(e). In addition, no individual may be a debtor under chapter 11 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court.
Peter Thiel is getting closer to his goal: Gawker Media has filed for bankruptcy protection and says it eventually plans to find a new owner for the company.
Gawker and owner Nick Denton are making the Chapter 11 filing today, in order to avoid paying Thiel and Hulk Hogan the $140 million judgment they won in Hogan’s privacy trial earlier this year.
Gawker has told it employees it still plans to fight the Thiel/Hogan case and to operate its publishing business while it does so. But it is also now formally entertaining offers to buy the company and says it has a firm bid from publisher Ziff Davis to buy the entire operation for less than $100 million.
Gawker and its banker Mark Patricof assume that the company will eventually see higher bids while it is in bankruptcy protection. Last year, in advance of the Hogan trial, Denton figured his company was worth something in the $250 million to $300 million range.
But in any case the company won’t trade hands until Gawker either beats back Thiel and Hogan or it finishes a court-approved restructuring. Because no one wants to buy an ongoing lawsuit from Peter Thiel.
Gawker Media filed for bankruptcy Friday and the company will be put up for auction after a judge ruled that a $140 million jury judgment against it in a costly legal battle with former professional wrestler Hulk Hogan would stand.
The sale auction will begin with an opening bid of $100 million from the digital media company and publisher Ziff Davis LLC, according to a person familiar with the matter.
The sale was triggered after the judge overseeing the invasion-of-privacy case brought by Hulk Hogan—whose real name is Terry Bollea—declined to issue a stay pending Gawker’s appeal. That required the company to put up a $50 million bond.
As a result, Gawker Media will declare bankruptcy in order to continue operating and paying its staff.
I’m downtown getting ready for Trump rally, so I’m not able to comment on this as much as I normally would. Needless to say, this is huge. Nick Denton has been defeated and his nasty creation is going up for sale. Today feels like the culmination of a long fight, but we’re not quite there yet. We also need to see where the new owners are going to take the place, whenever that happens. Reports seem to suggest that the Hogan case will need to be settled first. Hopefully he ends up getting his cash, from both Gawker Media and Denton personally.
UPDATE: Denton might try to buy back the actual Gawker site, since no one really wants it…
If a company like Ziff Davis doesn’t want Gawker.com — and might intend to shut it down — Denton “intends to buy it back,” one of Denton’s friends said Friday.
Right now Denton doesn’t have the money for it. But he continues to believe that he and Gawker Media will eventually prevail against Hogan through the appeals process.
If the courts side with Gawker, and if a new owner takes control of the company, and if that owner wants to shed Gawker.com, Denton could try to buy it back.
At that point, he’ll have tens of millions of dollars from the Gawker Media sale.