Gawker Media LLC, the online publishing pioneer, has filed for Chapter 11 bankruptcy protection, after the firm was ordered to pay Rs 940 crore in a lawsuit for broadcasting a sex tape of ex-wrester Hulk Hogan.
On Monday, Gawker asked a U.S. bankruptcy court for permission to borrow up to Rs 150 crore from an affiliate of buyout firm Cerberus Capital Management LP to help it through its sale process.
The loan from Cerberus, which is known for its controversial investments, will help Gawker continue to operate through bankruptcy.
In 2012, Gawker broadcasted a sex tape featuring Hogan, whose real name is Terry G. Bollea, and the wife of one of his friends.
Following the broadcast, Hogan filed a case in a U.S. court against the Gawker Media LLC. However, Hogan’s lawsuit was financially backed by Silicon Valley billionaire Peter Thiel, an early backer of facebook and a co-founder of PayPal.
Thiel’s involvement into the matter stemmed from his ire over Gawker’s writings about him and his friends. In 2007, Gawker had published a post entitled “Peter Thiel is totally gay, people” along with a series of articles against him.
Meanwhile, Ziff Davis, another renowned digital media company, has entered into an agreement to buy Gawker for Rs 600 crore, setting the floor for an opening bid in a court-supervised auction, which is expected to take place in the end of July this year.
On the contrary, the matter has become a battle of millionaires. While Hogan’s lawsuit, along with several others against Gawker, are being bankrolled by billionaire investor Peter Thiel, Pierre Omidyar, the billionaire founder of eBay, is supporting Gawker’s appeal of the 940-crore judgement for Hulk Hogan.