News Gawker Files for Bankruptcy Protection

  1. Gawker Media filed for bankruptcy protection today in New York federal court shortly after the company attorney informed a Florida judge that it was unable to pay a $140 million judgement to renowned wrestler, Hulk Hogan. The staggering award was the result of a jury verdict against Gawker who had post a sex tape of Hogan online. The Wall Street Journal reported that the company will be put up for auction with a bid starting at $100 million from publisher Ziff-Davis.

    Chapter 11: Thiel Takes Gawker Down for the Count


    gawker-media-news-bankruptcy.jpg
    Gawker is an online news organization, founded in 2003 by Nick Denton, which currently includes other media and gossip sites such as Deadspin, Jezebel and Kotaku. According to the Chapter 11 bankruptcy filing, Gawker has hundreds of creditors with only $50-100 million in assets and $100-500 million in liabilities. Chapter 11 bankruptcy results in a reorganization of a company. A trustee is appointed and a plan is created to keep the business running with attempt to pay off debts and creditors over time.

    It was recently revealed that Paypal billionaire, Peter Thiel, had secretly funded Hogan's lawsuit in order to take down the news organization. Thiel had vociferously objected to the gossip site's attempt to cover his private dating life. This included Gawker's allusion to Thiel's homosexuality publishing the headline “Peter Thiel is totally gay, people.”

    In an interview, Thiel told the New York Times:

    “It’s less about revenge and more about specific deterrence... I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest."

    The Ethics of Litigation Funding


    Private investment in litigation is not uncommon. But it is usual profit driven, not a personal vendetta. Thiel views his actions as philanthropic as opposed to vindictive. However Amazon's Jeff Bezos voiced his displeasure with the notion of any powerful person suing a media outlet out of existence. Bezos pointed to the importance of First Amendment free speech rights and the need for public figures to understand that they will be perpetually criticized and deal with that fact accordingly.

    "I don't think a billionaire should be able to fund a lawsuit to kill Gawker... Seek revenge and you will dig two graves — one for yourself... This country has the best free-speech laws in the world," he said. "You don't want to erode those. You don't want to create fear or chill."
    It seems certain that litigation funding will require greater scrutiny, perhaps even a disclosure to a court and the public regarding any financial backers.
    Legal Practice:
    Bankruptcy - Chapter 11
    Jurisdiction:
    • US Federal
    Court of Law:
    U.S. Bankruptcy Court

    Michael M. Wechsler

    Michael M. Wechsler
    Michael M. Wechsler is an experienced attorney, founder of TheLaw.com and of-counsel to Kaplan, Williams & Graffeo, LLC. He was also an SVP and chief Internet strategist at Zedge.net and legal consultant at Kroll Ontrack, a leading service e-discovery and computer forensics service provider.

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