Gawker Files for Bankruptcy and Opens Auction After Hulk Hogan Sex Tape Lawsuit

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After a highly-publicized legal battle over a private sex tape of Hulk Hogan posted by Gawker Media in 2012, the company has filed for Chapter 11 bankruptcy and will be put up for auction following the court decision that Gawker would award the former pro wrestler, real name Terry Bollea, a $140 million settlement in damages.

Gawker has been the subject of both public fascination and fury since its inception by founder Nick Denton in 2002, and the company has always been famed for its unorthodox, transparent management style and fierce independence, if not for its discretion. A business like Gawker couldn’t attain the level of influence, nor the legions of admirers and enemies alike it attracted during its 14-year run, without its share of high-profile defamation suits and controversy, but this trial has proven to be the straw that’s broken the camel’s back.

Famed for their sensational style of reporting and love of gossip, Gawker has always toed the line between lurid and illegal, and there’s a long list of big names that are still holding a grudge against the flashy media network. Coincidentally, it was recently revealed that billionaire venture capitalist and entrepreneur Peter Thiel, whom Gawker famously outed back in 2007 on their extinct blog Valleywag, has played a large part in funding Hogan’s case, clearly still indignant over Gawker’s habit of invading peoples’ personal lives and putting their reputations at stake.

Gawker is pursuing the auction after a judge declined to issue the company a stay pending appeal to halt the trial proceedings, allowing an opportunity for Hogan to actually take control of the company. An opening bid has already been placed by digital media publisher Ziff Davis LLC (the owners of AskMen, PC Magazine and IGN) for $90 million, with other bids sure to crop up soon as the bankruptcy court opens the auction to the floor.

“There’s a tremendous fit between the two organizations, from brands to audience to monetization,” said Vivek Shah, the chief executive of Ziff Davis. “We look forward to the possibility of adding these great brands—and the talented people who support them—to the Ziff Davis family.”

The bankrupt company has arranged for a $22 million loan to stay open while the auction proceeds. Gawker has been in something of a downward spiral even before Hogan’s lawsuit cropped up, facing internal problems and the departure of major editors and executives, issues with strikes and unionizing, and a growing pile of petty lawsuits, controversies and rising expenses in recent years that have jeopardized the media pioneer’s profitability.

Neither Denton nor Hogan have offered comment since news has broken of the case’s turnout. Stay tuned for updates in the coming weeks about Gawker’s fate.