9:52am PT by Eriq Gardner
Gawker's Chief Restructuring Officer Says There Are 55 Potential Bidders
If a bankruptcy judge won't hold back Hulk Hogan, Gawker founder Nick Denton will likely have to declare personal bankruptcy. And so on Monday, Gawker's attorneys told a bankruptcy court of the crucial role that Denton is playing in selling the company and urged a judge to enjoin Hogan's collection efforts.
Gawker declared Chapter 11 on June 10, after experiencing a $140.1 million final judgment in the Hogan sex-tape lawsuit. That day, Gawker brought an adversary proceeding against its legal foes and also announced it had come to a $100 million asset purchase agreement whereby Ziff Davis would be the stalking horse bidder to acquire Gawker's assets.
In a deposition last week, revealed today, Gawker's chief restructuring officer William Holden testified that 55 potential bidders have emerged to acquire the media company. He also said there has been a "deluge" of queries that would grow "exponential[ly] as soon as we are out of the no-shop period."
Gawker's lawyers are using the strong interest plus word of Denton's "critical" involvement to hit back against Hogan's efforts to move forward in an attempt to collect at least $10 million of the Florida judgment.
"Here, even an ordinary CEO would be critical, but Mr. Denton is no ordinary CEO," states Gawker's latest court filing. "He built the Company from the ground up, remains intimately involved in, and central to, its day-to-day operations, is a unique repository of knowledge about the Company, and is the single most critical person to maximizing the value of the sale of its assets."
In his own deposition, Denton says he has been highly involved in the planned auction, which was approved by a judge on Thursday.
"We have gradually been building up better responses to investor questions," he said. "Each investor or lender or acquirer has different preoccupations and, you know, some are much more interested in the editorial ethos and editorial personnel. Some are much more interested in commerce numbers. Some are more interested in traffic trends. So each party comes with their own requests. I couldn't particularly anticipate what requests are likely from bidders for the company apart from Ziff Davis."
Denton testified that Ziff Davis wanted his help and thus agreed to a consulting agreement. Another potential bidder wants to lock him up for several years as a continuing employee of the business whereas some other companies, he says, "have an existing management structure that they want to put the brands [on] ... ."
According to Holden, Gawker has had to adjust salary for some of the company's concerned employees.
"So far, we've had a number of employees leave the company, and we've also had to make a number of adjustments to a number of employees' base salary in order to bring them to market," testified Holden. "One of the anecdotal comments which came from one of the employees was that they are worried about their exposure and whether or not the company will continue to be able to indemnify them."
Denton, who himself has an indemnification agreement (whose scope is being challenged by Hogan), says that Gawker has agreed to indemnify any writers and editors who are named in civil actions "because otherwise they couldn't do their work if they had the threat of being named personally and pursued in lawsuits, as A.J. Daulerio was."
Apart from Hogan, Gawker is facing several other lawsuits reported to be part of a litigation funding campaign by Silicon Valley billionaire Peter Thiel. That gets attention in Gawker's push to get a judge to sign off on a preliminary injunction against Hogan (whose real name is Terry Bollea).
According to its court memorandum, "Two things are abundantly clear following the submission of Mr. Bollea’s opposition brief, document discovery and the depositions of three of the Debtors’ most senior executives, including Mr. Denton: (1) Gawker Media has far exceeded the standard necessary to obtain the relief it seeks in this Motion, which is necessary and appropriate to maximize the value of the now Court-authorized asset sale, and (2) Mr. Bollea remains intent on using this Adversary Proceeding to further his billionaire financial backer’s campaign to destroy the Debtors and their employees. The Motion should be granted and Mr. Bollea should not be allowed to serve as an agent for a personal vendetta to the detriment of these chapter 11 proceedings."