Many of our readers are likely familiar with Gawker Media Group, an internet publisher that owns numerous online properties, including the group’s eponymous and most popular blog Gawker. These same readers have likely been aware for some time now that Gawker Media Group has been hit with a number of lawsuits, one of which was so costly and devastating that it led to Gawker Media Group’s bankruptcy.
The case in question revolved around the former wrestler Hulk Hogan (real name Terry Bollea). Gawker published a sex tape of Terry Bollea, and Bollea sued Gawker Media Group for invasion of privacy, among other charges. The case was a massive victory for Bollea, with a jury declaring that Gawker Media had to pay $140 million to Bollea.
The rest of the details in the case aren’t entirely relevant. Instead, we want to discuss the cascading impact this ruling had on Gawker Media Group, and how the business overcame that impact.
The founder of Gawker, Nick Denton, feared personal liability, so he filed for bankruptcy protection. Similarly, Gawker Media Group filed for bankruptcy protection, and their assets were put for bid at auction. Recently the auction was completed, and Univision acquired Gawker Media Group’s online assets for $135 million. This bid was $35 million more than the bid put forth by the early front runner, Ziff Davis.
The Chapter 11 filing by Gawker Media Group effectively saved their online property. It allowed them to put their assets up for sale while also protecting them from collection efforts. Similarly, Chapter 11 bankruptcy protection can be used by a company to buy some time to come up with a closing or exit strategy for the company, or even a reorganization of the company.
Source: USA Today, “Gawker sold to Univision for $135M in bankruptcy auction,” Roger Yu, Aug. 16, 2016