'Gawker' Founder Nick Denton Files For Personal Bankruptcy

Gawker founder Nick Denton has filed for personal bankruptcy in the midst of his ongoing legal battle with Hulk Hogan and Peter Thiel. Denton's company Gawker Media LLC filed for Chapter 11 protection in June and is the result of a $140 million judgment that Terry Bollea, a.k.a. Hulk Hogan, won in an invasion of privacy lawsuit judgment earlier this year. CNN reports that although he has filed for personal bankruptcy, Denton vowed that Gawker would carry on.

Bollea v. Gawker arose after the controversial website posted a two-minute sex tape showing Bollea being intimate with Heather Clem, the ex-wife of his friend, radio personality Bubba The Love Sponge. Of the two-minute tape only approx nine seconds shows actual sexual activity and Bollea claims that the tape was made without his knowledge or consent.

Clem testified during the trial that she was also unaware that the sexual encounter with Bollea was being taped, but said that her then-husband liked to tape her having sex with other men. The tape was made by the couple's home security system and initially Bubba was named in the suit. Bubba went on the radio shortly after Bollea's lawsuit was filed and claimed that Bollea was absolutely aware he was being taped. The two former friends reached a settlement within two weeks and then Bubba changed his story saying that tape was made covertly.

Terry Bollea aka Hulk Hogan Testifies at Gawker Trial
Terry Bollea aka Hulk Hogan [Photo by John Pendygraft-Pool/Getty Images]According to The National Post, the drama didn't end there because Bubba changed his story again, this time telling the FBI that Clem, Bollea and himself all knew that the tape was being made. Gawker planned to call Bubba as a witness for their side in the litigation, but he fought the subpoena and quashed it citing his Fifth Amendment right against self-incrimination.

As part of their defense, Gawker wanted to question Bubba about whether he and Bollea had conspired to release the tape because Bollea was running out of money. Bollea denied these accusations and claimed that he was distraught when the video was released.

There is apparently more to the lawsuit Bollea filed against Gawker than meets the eye, however. Forbes reported that PayPal and early Facebook investor Peter Thiel was funding Bollea's lawsuit against Gawker, as payback against the website.

Thiel's vendetta against Gawker began in 2007 when the website outed him as gay before he had publicly come out. The article, titled "Peter Thiel is totally gay, people" sparked controversy with many people calling the move malicious and a new low in journalism. Forbes also reported that it was rumored that Thiel has backed several lawsuits against Gawker and keeps their law firm very busy.

Peter Thiel speaking at the RNC
Peter Thiel speaking at the RNC. [Photo by Alex Wong/Getty Images]After initially refusing to take the Bollea sex tape down from their website, Gawker eventually pulled it and replaced it with a message saying "The video posted here has been removed pending litigation."As a personal defendant in the lawsuit, Nick Denton is personally liable for $10 million of the $140 million judgment, and is jointly liable along with former Gawker editor A.J. Daulerio, and Gawker Media itself, for $115 million.

Thiel may have achieved his goal of ruining Gawker and Denton. Gawker Media is going on sale at a bankruptcy auction in August, and although Gawker and Denton are hopeful they will successfully appeal the $140 million judgment, the sale is going ahead.

Nick Denton told Recode that Gawker is actually doing better this year than it did last year, and it is earning more revenue. With such a huge judgment weighing on them, bankruptcy was likely the only option for both Denton and Gawker, but Denton is certain that Gawker will go on despite the lawsuits.

[Photo by John Pendygraft-Pool/Getty Images]