Gawker Files Bankruptcy Lawsuit Against Foes Including Hulk Hogan

Court papers say it's likely that Nick Denton will be filing for personal bankruptcy and that Hogan becoming Gawker's owner would be "inequitable."
Illustration by: John Ueland
Gawker founder Nick Denton (top); Hulk Hogan

After filing for Chapter 11 bankruptcy and paving the way for its planned sale to Ziff Davis, Gawker Media has now sued Hulk Hogan, journalist Ashley Terrill, Charles C. Johnson and others whom the blog collective has been battling in court in recent months.

By initiating an adversary case, Gawker hopes to stave off the possibility of paying off judgments that it says would have a "crippling effect on the Debtor's estates, prospects of reorganization, and distribution to creditors."

Gawker, which according to filings had just under $50 million in revenue in 2015, also warns of a "potentially disastrous chilling effect on the Debtor's work force, driving writers and editors to leave the Debtor."

The most formidable foe is Hulk Hogan, who is due about $140 million after triumphing in an invasion-of-privacy lawsuit over the publishing of his sex tape. Gawker founder Nick Denton himself is personally liable for $10 million of that amount and while he may be indemnified, the prospect of personal bankruptcy is raised for Denton.

That, according to the court papers, would be "tremendously distracting" as Denton attempts to help Gawker rebound from its troubles. 

There's even talk of how Hogan, whose real name is Terry Bollea, could become the owner of Gawker.

"In the unlikely event that Mr. Denton would not file for personal bankruptcy protection in the absence of the relief requested here, his assets undoubtedly would be seized immediately to satisfy the judgment entered in the Bollea Litigation," states the complaint. "Since Mr. Denton’s assets are substantially comprised of his stock in GMGI, Mr. Bollea would become a substantial owner of GMGI, thereby defeating the Debtor’s chance at a successful reorganization. This is an especially inequitable result because the Bollea Litigation is subject to an appeal, Mr. Bollea merely holds a contingent, unliquidated litigation claim against the Debtor. Moreover, the driving force behind the Bollea Litigation is Peter Thiel, a billionaire investor, who holds a personal vendetta against the Company and has publicly admitted that he funded the Bollea Litigation, and other lawsuits against Gawker to (as the New York Times reports) 'try to put the media company out of business.'”

Gawker, represented by attorneys at Ropes & Gray, is now requesting injunctive relief that would prohibit the defendants (Hogan, Terrill, Johnson, etc.) from taking further action against it and Denton without the court's approval.

June 10, 3:54 p.m. ET: A judge has issued a temporary restraining order against Hogan from taking steps to enforce a judgment against Denton.

A statement from David Houston, Hogan's lawyer, reads, "We have every intention to continue to pursue our judgment against Gawker and to hold them accountable for violating Mr. Bollea's privacy whether it be in the bankruptcy court or any other court."

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