Many California readers are aware of the recent troubles facing Nick Denton, the founder of Gawker Media, LLC. The media company was behind a leaked sex video in which former wrestler Hulk Hogan appeared. When Hogan sued, he was able to prevail, and a $140 million judgment followed. That is the primary factor that may lead Denton to file for bankruptcy in the weeks ahead.
Denton is personally responsible for $125 million of that judgment. He sought protection from that liability, but in a recent court action those protections were denied. That leaves Denton with a huge bill to pay, and limited ability to cover the expense. According to a statement released by Denton, his wealth is limited to the equity he owns in his apartment and his share of Gawker, which is reportedly 30 percent of the company.
Gawker Media has filed for Chapter 11 bankruptcy. The company has plans for a bankruptcy sale, and Denton argued that having personal liabilities related to the lawsuit would distract him from the business of selling Gawker to the highest bidder. However, the court disagreed, and Denton will not find relief through that avenue.
It is not uncommon for business owners in California and elsewhere to suffer personal financial losses when their companies go through periods of difficulty. In this case, it is possible that one significant lawsuit could bring down both the company and its owner. While the sale of Gawker could allow the internet publishing company to survive in a new form, the best option for Denton as an individual may be to file for bankruptcy and hope for the best.
Source: Reuters, "Gawker Media founder faces personal bankruptcy", Jessica Dinapoli, July 19, 2016