After a U.S. judge refused on Tuesday, July 19, to extend protections shielding Nick Denton from liabilities resulting from a lawsuit over the invasion of privacy of Hulk Hogan, the founder of the Gawker Media LLC risks personal bankruptcy.
New York Daily News reports that Denton's request for extended protections against paying his part of the amount awarded to Hulk Hogan was denied by a judge. The judge's decision will likely led to Denton's bankruptcy.
According to Reuters, the judge's decision represents a victory for the billionaire investor Peter Thiel as well as for Hogan, former professional wrestler. Following the publication of an article by Gawker about Thiel's homosexuality, Thiel, an early board member of Facebook Inc, has helped fund Hogan's lawsuit.
Denton said in a statement that Gawker Media's popular brands will come under a new ownership. He pointed out the importance of a free press and added that the Facebook board member will have nothing to win in the end for other than "a reputation for thin skin."
After Hogan won a $140 million judgment against the company over the publication of sex tape excerpts, in June Gawker Media filed for Chapter 11 bankruptcy protection. According to court fillings, from the $140 million judgment, Denton is liable for an amount of $125 million.
Gawker Media attorneys had asked the court for the same protections for the company's founder. The court refused to give Denton a shield from lawsuits and had only agreed to give him temporary protections.
Attorneys for Gawker Media argued that Denton would be distracted by his own personal bankruptcy process without the shield. They also said that Gawker Media's plan to sell itself in bankruptcy would suffer.
Denton said prior to the ruling that a personal bankruptcy process would affect his ability to navigate Gawker Media through its auction. But Hogan's attorneys argued that a personal bankruptcy process of Denton would not weight on Gawker Media, because the company already has in place outside professionals and an executive team that would be able to execute the sale.