10:55am PT by Eriq Gardner
Gawker Founder Nick Denton Files for Personal Bankruptcy
Nick Denton, having created and shepherded one of the most influential digital news networks only to rocked by a Florida jury who came to the conclusion that his Gawker had gone too far in the posting of a celebrity's sex tape, has filed for personal bankruptcy.
The Chapter 11 filing on Monday occurs after a flurry of activity in the months since Hulk Hogan prevailed in an invasion-of-privacy lawsuit stemming from an October 2012 post where Gawker invited its readers to watch the former professional wrestler have sex with a mysterious woman later revealed to be the wife of his best friend. After a judge upheld the $140.1 million verdict against Gawker, including $10 million due from Denton personally, Gawker filed its own bankruptcy petition with plans to sell the company. Gawker had hoped to use its bankruptcy to hold off Hogan's collection efforts against Denton, but on July 19, those efforts were denied. Nor could Gawker get the Florida trial judge to stay the judgment pending an appeal.
As a result, Denton has himself moved into the temporary safe haven of bankruptcy court, marking a victory of sorts not only for Hogan, but also for Peter Thiel, the Silicon Valley billionaire who had funded litigation against Gawker because of an apparent grudge. In court papers, Denton estimates $10 million to $50 million in assets and $100 million to $500 million in liabilities.
On Twitter, Denton wrote, "On this bitter day for me, I am consoled by the fact that my colleagues will soon be freed from this tech billionaire's vendetta."
In the next few weeks, Denton will be communicating with Ziff Davis and other companies interested in purchasing Gawker Media, whose assets include popular sites Deadspin, Gizmodo and Jezebel. (The debtor has indicated in testimony last week that there are 15 potential bidders who have signed non-disclosure agreements and three serious contenders.) In testimony before a judge, Denton had called the possibility of filing for personal bankruptcy a needless distraction that would only hurt Gawker's creditors like Hogan. Ultimately, a New York judge decided against issuing an injunction.
Down in Florida, Hogan's attorneys exerted pressure by telling Pamela Campbell, a circuit judge, how Denton had misrepresented his state of financial affairs by failing to tell a court about a pending bankruptcy that would harm the value of Gawker shares, Denton's most significant asset. Last week, Campbell came back with a scorching order that excoriated Gawker's team and denied a stay of execution on Hogan's $140 million verdict. An emergency move was quickly made to try get an appeals court to put the breaks on Hogan, but the efforts weren't enough to provide Denton with the shield he needed to stop his own personal bankruptcy.
Notwithstanding the latest Chapter 11 filing, Denton will still be able to move forward in attempts to get an appeals court to throw out the Hogan verdict.
David Houston, Hogan's attorney, issued a statement: "Following a lengthy trial, a jury verdict and much legal maneuvering, the time has come for Nick Denton to accept responsibility for the decisions he made and the rewards he reaped based on the suffering and humiliation of others. Mr. Denton has spent vast amounts of time and money attempting to dodge his responsibility and a judge has subsequently determined that he misled the court in these efforts. The Appellate court, in which he has guaranteed victory over Mr. Bollea, is not the puppet he thought it would be. His bankruptcy has nothing to do with who paid Mr. Bollea's legal bills, and everything to do with Denton's own choices and accountability. If even one person has been spared the humiliation that Mr. Bollea suffered, this is a victory."
After filing for Chapter 11, Denton sent out a memo to staff.
"Yes, it’s a disturbing to live in a world in which a billionaire can bully journalists because he didn’t like the coverage," he wrote. "Still, I’m in a positive frame of mind, because our influential brands will soon be free to thrive under new ownership, and our very existence as an independent entity has been a triumph. For once, the journalistic cliché is appropriate: We’ve spoken truth to power. Sometimes uncomfortable truths. Sometimes gossipy truths. But truths. There is a price to pay for that, and I am paying it now. But we never gave up our souls in the pursuit of an easy life."