Gawker Media Files For Chapter 11 Bankruptcy Protection| June 12, 2016
Gawker Media and certain affiliates filed for protection under Chapter11 of the United States Bankruptcy Code on June 12, 2016 in the United States Bankruptcy Court for the Southern District of New York under Case No. 16-11700 (SMB).
The Debtors in these cases, along with last four digits of the taxpayer identification number are: Gawker Media LLC (0492); Gawker Media Group, Inc. (3231); and Kinja Kft. (5056). The offices of Gawker Media LLC and Gawker Media Group, Inc. are located at 114 Fifth Avenue, 2d Floor, New York, NY 10011. Kinja Kft.’s offices are located at Andrassy ut 66. 1062 Budapest, Hungary.
William D. Holden is a Managing Director in the restructuring practice of Opportune LLP and serving as the Chief Restructuring Officer for Gawker Media Group, Inc. (“GMGI”) and discusses the filing:
Overview of the Debtors’ Businesses
The Debtors’ Business Operations
“The Debtors in these Chapter 11 Cases include GMGI and its wholly-owned subsidiaries, Gawker Media and Kinja.
“Gawker is a privately-held, online media company whereby Gawker Media operates seven distinct media brands with corresponding websites under the names Gawker, Deadspin, Lifehacker, Gizmodo, Kotaku, Jalopnik, and Jezebel (the “Websites”), all pursuant to intellectual property owned by and licensed from Kinja. While Gawker is the most well-known brand and website, the Company is underpinned by the six other brands identified above, which actually represent approximately 85% of revenues. The Company’s commercial flagship is Gizmodo, a technology news brand and website, and the Company’s video game, sports, how-to and automotive properties (Kotaku, Deadspin, Lifehacker, and Jalopnik) are also leaders in their categories. The Company also licenses its web content internationally to third parties that run similar websites based on the Company’s brands, such as Gizmodo en Espanol, GizmodoAustralia, Kotaku Australia, and Lifehacker Australia.”
“The Company’s various websites cover, among other things, news and commentary on current events, politics, pop culture, sports, cars, fashion, productivity, technology and video games. The Websites have a collective global readership of over 90 million (approximately 50 million in the United States), generally in the age range of 18 to 34 years old. The Debtors are recognized as the only digital media company to grow to scale and viability with minimal external investment. Between 2012 and 2015, the Company experienced a compound annual growth rate of approximately 24%, and the company had revenue in 2015 of approximately $49.9 million. The Company’s business is run from their leased offices at 114 Fifth Avenue in New York, New York. The Company also leases de minimis office space in other cities for certain employees, including through “WeWork”, a co-working office space rental company.”
“The following provides a description of the Company’s media brands and the corresponding Websites:
- Gizmodo: Gizmodo.com was the first brand launched by the Company, covering consumer electronics and other technology. The scope extends to science and science fiction, and natural and man-made wonders. Gizmodo is the group’s commercial flagship, a strong appeal to blue-chip technology and automotive advertisers. Its exclusives, on subjects from the iPhone to the hidden bias in news provided by social media, are drivers for technology conversation. The website has approximately 19.7 million readers in the U.S. and over 35 million readers globally. Approximately 25 staff members at Gawker Media work on the Gizmodo brand.
- Deadspin: Deadspin.com focuses on bringing sports fans stories that may not make it to more mainstream sports news. The property is best known for exclusives about sports stars, and Deadspin’s coverage has broadened to include male lifestyle coverage. The website has approximately 12 million readers in the U.S. and over 13 million readers globally. Approximately 16 staff members at Gawker Media work on the Deadspin brand.
- Gawker: Gawker.com is the most popularly known of the Company’s brands. From its origin as a Manhattan centric media blog, it has grown into a national news operation focused on politics and culture. The website has approximately 11.7 million readers in the U.S. and over 14 million readers globally. Approximately 13 staff members at Gawker Media work on the Gawker brand.
- Jezebel: Jezebel.com is focused on providing media for, by and about women. It began as an antidote to more typical women’s magazines, bringing an intelligent perspective to celebrity, politics and culture. Jezebel is home to one of the group’s most active reader communities. The website has approximately 9.5 million readers in the U.S. and approximately 13 million readers globally. Approximately 14 staff members at Gawker Media work on the Jezebel brand.
- Lifehacker: Lifehacker.com focuses readers on how to improve their personal productivity and their lives, whether through a new app or a new method of meditation. Explanatory articles, and the reader discussions they spark, contribute to Lifehacker’s reputation as a definitive reference site. The website has approximately 15.6 million readers in the U.S. and over 27 million readers globally. Approximately 25 staff members at Gawker Media work on the Lifehacker brand.
- Kotaku: Kotaku.com injects intelligent cultural criticism and a playful spirit to the entertainment industry’s largest and newest category, the video game. As well as reviewing games and other interactive entertainment, Kotaku covers discussion on the politics of video game communities. The website has approximately 7.5 million readers in the U.S. and over 13 million readers globally. Approximately 14 staff members at Gawker Media work on the Kotaku brand.
- Jalopnik: Jalopnik.com provides a forum for auto enthusiasts in digital media. Covering new models, industry news, car culture and motorsports, it aims to inject humor and candor into this media category. The Jalopnik Film Festival, sponsored the last two years by a major auto company, is one of the Company’s marquee annual events. In video, the brand has made an impact with Neat Stuff In Cool Cars, an unconventional approach to car testing, and Jason Drives, in which a mad genius writer goes for a spin in the weirdest cars on the planet. The website has approximately 7.5 million readers in the U.S. and over 10 million readers globally. Approximately 10 staff members at Gawker Media work on the Jalopnik brand.”
“The Company’s primary source of revenue is earned through sales of advertising space on the Websites. The Debtors’ advertising businesses builds on the high engagement of the brands’ readership, including those readers’ participation in online discussions, their expertise on the subjects, and their influence with other consumers. The Company’s influencer marketing programs for clients include sponsored discussions, licensing of testimonials, events which bring invited readers access to new shows and products, and media generated by those events.”
“The Company has five key departments: sales, technology, editorial, legal, and operations. The head of each department reports to Nick Denton (“Mr. Denton”). Each of the Company’s Websites has its own “editor-in-chief,” and those editors report to the Company’s Executive Editor. At present, daily editorial decisions are made by the editors-in-chief and John Cook as Executive Editor, with input from Mr. Denton, and major editorial decisions are made with input of a three-person committee consisting of Mr. Cook, Mr. Denton, and the Company’s general counsel. The Websites’ individual editors-in-chief manage editorial staff, including writers, to generate content for the Websites. Other key roles at the company include the executive editor for feature pieces, the manager of publishing partnerships, the executive managing editor, the director of the Debtors’ editorial labs, the art direction department, and the video direction department. These individuals provide services across the Websites and brands.”
“Kinja, the Debtor subsidiary operated in Hungary, owns the proprietary publishing and discussions platform and intellectual property used by Gawker Media’s brands and Websites (collectively, the “Kinja Assets”). Gawker Media has an exclusive license of the Kinja Assets, as described below, and also has intercompany arrangements with Kinja to enable the affiliates to maximize use of their complementary assets and employees. The Kinja platform is unique and geared toward surfacing higher value discussions on posts using an algorithm developed by Kinja. The Company believes that, due to use of Kinja’s proprietary platform, the Websites have the best commenting environment of any digital media group. Kinja has approximately two dozen employees in Hungary, which consist primarily of computer programming professionals.”
Intercompany Arrangements Between Gawker Media and Kinja
“To facilitate Gawker Media’s use of Kinja’s intellectual property, web domains, and proprietary publishing platform, Gawker Media and Kinja are party to several intercompany agreements, each as described herein.
- Kinja’s IP License to Gawker Media. First, pursuant to a Master License Agreement, dated as of January 1, 2011 (the “Master License Agreement”), between Gawker Media and Kinja, Gawker Media obtained an exclusive license to use certain brand elements, including trademarks, trade names, and service marks, as well as associated goodwill, websites, web addresses, and URLs, patents, copyrights, works of authorship, trademarks, and related intellectual property. Under the terms of the Master License Agreement, Gawker Media agreed to pay Kinja a quarterly license fee determined by the amount of revenue received or receivable by Gawker Media over the twelve month calendar year beginning January 1 and ending December 31.
- Gawker Media’s Services to Kinja. Second, pursuant to a Development Agreement, dated as of January 1, 2007 (as amended on January 21, 2013, the “Development Agreement”), by and between Gawker Media and Kinja, Gawker Media provides a number of development services to Kinja, including designing, developing, and testing scalable software to serve as a publishing and content managing platform for Kinja’s properties and other websites, handling of content produced by users of the platform (posts, comments, video, photos, etc.), providing for the storage of media related to content production and aggregation and display of content sourced from external resources, providing security and authentication systems to ensure authenticity of user generated content, and providing Kinja with information and assistance as is necessary to allow Kinja to sell advertising. Under the terms of the Development Agreement, Kinja agreed to pay Gawker Media for the direct costs of the services provided plus 5%. Unless terminated by one party upon material breach by the other party, the term of the Development Agreement expires on December 31, 2022
- Kinja’s Services to Gawker Media LLC. Third, pursuant to an Intercompany Services Agreement, dated as of January 1, 2012 (the “Kinja Services Agreement”), also between Gawker Media and Kinja, Kinja agreed to perform editorial services, content creation services, and other services for Gawker Media. Under the terms of the Intercompany Services Agreement, Gawker Media agreed to pay Kinja for the costs of services provided plus 5%.”
The Debtors’ Assets
“GMGI’s principal assets are its 100% ownership of Kinja and Gawker Media.It does not have real estate holdings, significant cash on deposit, or other fixed assets.”
“Gawker Media’s value derives from its Websites’ content, primarily from selling advertising on the Websites and earning revenue from sales of products that Gawker Media writes about or promotes on the Websites. Advertising on the Websites accounts for approximately 75% of Gawker Media’s revenue per year, as compared to all other sources combined, which account for approximately 25% of gross revenue. Advertising revenue is
primarily earned by serving display, content and video advertisements on the site. Nonadvertising revenue is primarily earned via links to products users can purchase on other sites, which in turn pay the Company an affiliate fee or commission. The Company has an in-house sales team that sells advertising space on the Websites, and the Company also engages a number of third-party sellers to sell its unsold advertising inventory on open exchanges. The Company’s Website advertisers who purchase traditional ad space are not subject to long-term contracts. The company uses standard “insertion orders” that follow the standards established by the Interactive Advertising Bureau. For custom ad campaigns, the ad purchases typically span one quarter or possibly two quarters. For regular, non-custom ad purchases, the duration of the ad on the Company’s Websites is usually 30 to 60 days.”
“Finally, Gawker Media also derives a small portion of its revenue from international licensing of the content from its Websites. For example, Gawker Media licenses the content of its Gizmodo Website to entities in Brazil, Europe and Japan, and those international entities in turn use the Gizmodo content for their own websites using rich site summary (RSS) feeds.”
“Kinja’s assets are primarily comprised of its ownership of the intellectual property that it licenses to Gawker Media.”
The Debtors’ Capital Structure and Summary of Debt
“As of the Petition Date, the Debtors had approximately $21.2 million of outstanding funded indebtedness, comprised of first and second lien bank debt. The Debtors are also obligated on a posted, but not drawn, letter of credit in the amount of approximately $5.3 million.”
First Lien Credit Agreement
“On September 24, 2012, Gawker Media entered into a loan and security agreement (as subsequently amended, the “First Lien Credit Agreement”) with Silicon Valley Bank (the “First Lien Lender”), pursuant to which the First Lien Lender agreed to provide to Gawker Media a term loan facility in the aggregate principal amount of $7,666,666.67 (the “First Lien Term Loan”) and a letter of credit with an undrawn face amount of $5,302,066.00 (the “First Lien Letter of Credit”). The Debtors and Mr. Denton also executed certain security, pledge and guaranty agreements and other documentation in connection with the obligations under the First Lien Credit Agreement. The obligations under the First Lien Credit Agreement are guaranteed by the GMGI and Kinja. Such obligations are also secured on a first priority basis by liens on substantially all of the assets of the Debtors.”
“As of the Petition Date, approximately $6,222,222 plus accrued interest was outstanding under the First Lien Credit Agreement.”
Second Lien Credit Agreement
“On January 21, 2016, GMGI entered into a credit agreement (the “Second Lien Credit Agreement”) with US VC Partners LP (“Second Lien Lender”), a Delaware limited partnership, pursuant to which Second Lien Lender agreed to extend a term loan facility to GMGI in the initial amount of $15,000,000 (the “Second Lien Term Loan”). The Debtors and Mr. Denton also executed certain security, pledge and guaranty agreements and other
documentation in connection with the obligations under the Second Lien Credit Agreement. The obligations under the Second Lien Credit Agreement are guaranteed by Gawker Media. Such obligations are also secured by a second priority lien on substantially all of the assets of the Debtors.”
“As of the Petition Date, approximately $15,000,000 plus accrued interest was outstanding under the Second Lien Credit Agreement.”
“The relationship among Gawker’s lenders are governed by an Intercreditor Agreement, dated as of January 21, 2016, by and between the First Lien Lender and the Second Lien Lender (the “Intercreditor Agreement”).”
“Gawker Media currently has $13 million in outstanding intercompany debt owed to its Debtor affiliate, Kinja, and $250,000 in outstanding intercompany debt owed to its Debtor parent, GMGI, pursuant to the Promissory Note, dated as of January 10, 2014 (the “January 2014 Promissory Note”), Gawker Media promised to pay $8 million to Kinja, with interest on the outstanding principal amount payable at the rate of 1.75%, compounded annually. The January 2014 Promissory Note matures on the earliest of (i) January 10, 2019, (ii) the signing by Gawker Media of an agreement to sell substantially all of its assets, provided that GMGI’s stockholders hold or control less than 50% of the voting power of the surviving or acquiring entity, and (iii) the consummation of the first public offering of the common stock of Gawker Media, Kinja, or GMGI. There is currently $8 million outstanding on the January 2014 Promissory Note.”
“Pursuant to the Promissory Note, dated as of January 10, 2015 (the “January 2015 Promissory Note” and, together with the January 2014 Promissory Note, the “Kinja Promissory Notes”), Gawker Media promised to pay $5 million to Kinja, with interest on the outstanding principal amount payable at the rate of 1.75%, compounded annually. The January 2015 Promissory Note matures on the earliest of (i) January 10, 2020, (ii) the signing by Gawker Media of an agreement to sell substantially all of its assets, provided that GMGI’s stockholders hold or control less than 50% of the voting power of the surviving or acquiring entity, and (iii) the consummation of the first public offering of the common stock of Gawker Media, Kinja, or GMGI. There is currently $5 million outstanding on the January 2015 Promissory Note.”
“Pursuant to the Promissory Note, dated as of October 7, 2015 (the “GMGI Promissory Note”), Gawker Media promised to pay $250,000 to GMGI, with interest on the outstanding principal amount payable at the rate of 2.00%, compounded annually. The GMGI Promissory Note matures on the earliest of (i) December 31, 2020, (ii) the signing by Gawker Media of an agreement to sell substantially all of its assets, provided that GMGI’s stockholders hold or control less than 50% of the voting power of the surviving or acquiring entity, and (iii) the consummation of the first public offering of the common stock of Gawker Media, Kinja, or GMGI. There is currently $250,000 outstanding on the GMGI Promissory Note.”
Unsecured Debt and Potential Unsecured Claims
“The Debtors do not have funded unsecured debt, and their trade obligations to date have been manageable. The largest potential unsecured claims are contingent, disputed claims arising from pending litigations against Gawker Media (the “Article Lawsuits”). In general, the Article Lawsuits arise from claims for defamation or related torts based on articles written for and published by a Gawker Media Website. The aggregate amount of damages alleged by plaintiffs or awarded to plaintiffs exceeds $250,000,000. A summary of the Article Lawsuits is below:
- Bollea v. Gawker Media LLC, et al., No. 12012447-CI-011 (Fla. 6th Jud. Cir. Pinellas Cty.) (the “Bollea Litigation”). Gawker Media, Nick Denton, and AJ Daulerio are defendants in this lawsuit for invasion of privacy, right of publicity, intrusion upon seclusion, intentional infliction of emotional distress, and violations of Florida’s wiretap statute arising from publication of a report and commentary and accompanying video excerpts involving Plaintiff’s extramarital affair, a tape depicting it, and Plaintiff’s sex life and public persona more generally. A Florida jury awarded $140.1 million to the Plaintiff. Mr. Denton and Mr. Daulerio are each jointly and severally liability on $115 million of the judgment. An additional $10 million of punitive damages was assessed against Mr. Denton separately, and an additional $100,000 of punitive damages was assessed against Mr. Daulerio separately. The bond to stay execution of the judgments pending appeal is $50 million for each of the Bollea Litigation defendants. The court has refused to reduce the cash bond and denied Gawker Media’s request to post stock or alternative collateral in lieu of the bonds. As of June 10, 2016, the judgments in the Bollea Litigation became available for execution.
- Huon v. Denton, et al., No. 11-cv-03054 (N.D. Ill.) and on appeal No. 15-3049 (7th Cir.) (the “Huon Litigation”). Gawker Media, Nick Denton and Gabrielle Darbyshire are defendants in this suit, which asserts causes of action for defamation and related torts arising from an article published by Gawker and from third-party user comments posted on Gawker’s website. The article at issue reported on plaintiff’s filing of a lawsuit against another publisher, Above the Law, over its report about an Illinois criminal proceeding in which Huon was charged with rape and acquitted by a jury. The trial court dismissed the case against each Gawker defendant (including the individuals). Huon appealed the decision and the U.S. Court of Appeals for the Seventh Circuit heard argument on May 31, 2016. Huon is seeking at least $100,000,000 in damages.
- Ashley Terrill v. Gawker Media LLC, et al., No. 16-CV-00411 (S.D.N.Y.) (the “Terrill Litigation”). Gawker Media, Sam Biddle, John Cook, and Nick Denton are defendants in this suit for defamation, breach of confidence, intentional interference with prospective economic advantage, fraudulent misrepresentation, and negligent hiring and retention. The suit arises from an article regarding plaintiff’s investigation into a former executive for the dating application Tinder, and plaintiff’s belief that she was being harassed for undertaking the investigation. The Terrill Litigation is currently pending in the Southern District of New York. The Court has not set a briefing schedule for Defendants’ motion to dismiss. Plaintiff is seeking at least $10,000,000 in damages.
- Teresa Thomas v. Gawker Media LLC, et al., No. 16-CV-09519 (Or. Multnomah Cty. Cir. Ct.) (the “Thomas Litigation”). Gawker Media, Nick Denton, and John Cook are defendants in this defamation and invasion of privacy suit arising from an article that referenced plaintiff’s employment at Yahoo Inc. and her potential romantic involvement with a Yahoo, Inc. executive. The case is pending in the Circuit Court for the State of Oregon, County of Multnomah. There has been no activity in the case to date aside from the filing of the complaint and purported service of the complaint. The plaintiff is seeking $74,000 in damages.
- Ayyadurai v. Gawker Media LLC, et al., No. 16-CV-10853 (D. Mass.) (the “Ayyadurai Litigation”). Gawker Media, Nick Denton, Sam Biddle, and John Cook are defendants in this suit for libel, intentional interference with prospective economic advantage, intentional infliction of emotional distress, and negligent hiring and retention. The suit arises from publication of three articles regarding the plaintiff’s claims to have invented e-mail. The complaint is filed in the District of Massachusetts, but the Defendants have not been served. The plaintiff is seeking at least $35,000,000 in damages.
- Charles C. Johnson, et al. v. Gawker Media LLC, et al., No. 15CECG03734 (Cal. Super. Ct. Fresno Cty.) (the “Johnson Litigation”). Gawker Media, J.K. Trotter, and Greg Howard are defendants in this suit for defamation, injurious falsehood, invasion of privacy, and conspiracy to interfere with civil rights. The suit arises from three articles regarding plaintiff’s behavior. The complaint was filed in Superior Court of California, County of Fresno, but Defendants have not been served. The plaintiff is seeking at least $24,000,000 in damages.
- Bollea v. Buchwald, et.al., No. 16-002861-CI (Fla. 6th Jud. Cir. Pinellas Cty.) (the “Bollea II Litigation”). Gawker Media is a defendant in this suit for intentional interference with contractual relations and intentional infliction of emotional distress, arising from an alleged leak of a sealed transcript containing racially charged statements by plaintiff. Plaintiff also brings claims against third parties, who are unrelated to the Debtors, for invasion of privacy, public disclosure of private facts, intrusion upon seclusion, intentional infliction of emotion distress, intentional interference with contractual relations, violation of a Florida Statute prohibiting the dissemination of private oral communications, civil conspiracy, and intentional interference with contractual relations and advantageous business relationships. The appellate court in Florida recently issued an order to show cause for why Gawker Media’s writ for recusal of the trial judge should not be granted.
- Williams v. The MLB Network, No. A-1674-14T3 (N.J. Super. Ct. Camden Cty.) (the “Williams Litigation”). Gawker Media was a defendant in this defamation suit arising from a blog post regarding the plaintiff’s behavior at a baseball game, currently pending in the Superior Court of New Jersey, Camden County, Law Division. Gawker Media has been dismissed as a defendant at this time.
- Mail Media Inc. d/b/a Mail Online v. Gawker Media LLC and James King., No. 159134/2015 (N.Y. Sup. Ct., N.Y. Cty.) (the “Mail Media Litigation”). Gawker Media and James King are in this defamation suit arising from a blog post regarding journalistic practices used by the website The Daily Mail, currently pending in the Supreme Court for the State of New York, County of New York.”
“GMGI is a privately held company. GMGI has issued and outstanding Series A Preferred Shares, Series A Preferred Options, Series B Preferred Shares, Common Shares and Common Share Options. As of the Petition Date, founder Nick Denton was the single largest shareholder in the company. Other share owners include US VC Partners LP, a family trust, current and former executives and employees, and other members of the founding team. GMGI’s equity holders are set forth as an Exhibit to its Chapter 11 petition.”
EVENTS LEADING TO THE CHAPTER 11 CASES
“Since its inception in 2002 as a single blog operated from Nick Denton’s apartment, the Company has grown into a network of seven branded news and lifestyle Websites, each with millions of readers. Historically, the Company’s financial health was good; it survived the 2008-2009 recession and was profitable from 2010 until 2015. However, despite its long running success and commendable growth trajectory, the Company suffered this year from exorbitant legal expenses and a recent judgment totaling more than $130 million. While the Company feels strongly that the judgment will be overturned on appeal, it cannot post the $50 million bond required by the Florida state court to stay execution of the judgment while the appeal is pending.”
“Accordingly, the Company was forced to seek immediate chapter 11 relief. The Company has determined that an organized restructuring through the chapter 11 process has the potential to preserve the jobs of employees, the wealth of the media brands developed at the Company and its affiliate over the last decade, and to maximize value for the creditors of the Debtors’ estates.”
Bollea Litigation and Judgment
“The Bollea litigation arises out of a publication on Gawker.com of an article (the “Hogan Story”) commenting on a video depicting plaintiff Terry Gene Bollea, the professional wrestler and entertainer known as “Hulk Hogan,” having sexual relations with Heather Clem, the wife of his then-best friend, radio disk jockey Bubba Clem, along with brief and highly edited excerpts from the Video (the “Excerpts”). Bollea initially challenged both the publication of both the Hogan Story and the Excerpts, later narrowing his claim to focus only on the Excerpts.”
“Bollea’s claims consist of causes of action for, among other things, publication of private facts and violation of plaintiff’s common law right of publicity. Bollea initially sued a number of defendants, but only three defendants were left at the time of trial: Gawker Media LLC, Nick Denton, and A.J. Daulerio (the author of the Hogan Story).
“Bollea initially sued in federal court. Bollea tried on several occasions to obtain preliminary injunctive relief to have the video removed, but the federal judge (Hon. James Whittemore) denied each of the motions, finding that the Hogan Story and Excerpts were protected by the First Amendment. See, e.g., Bollea v. Gawker Media LLC, 2012 WL 5509624 (M.D. Fla. Nov. 14, 2012); Bollea v. Gawker Media LLC, 913 F. Supp. 2d 1325 (M.D. Fla.
2012). Thereafter, Bollea dismissed his federal action and re-filed his claims in state court. The state court entered a temporary injunction, which was then stayed and reversed by Florida’s Second District Court of Appeal. See Gawker Media LLC v. Bollea, 129 So. 3d 1196 (Fla. 2d DCA 2014). The appeals court unanimously reversed the injunction on the basis that the Hogan Story and Excerpts addressed a matter of public concern and that a temporary injunction could not issue under the First Amendment. Id. at 1200-02. Based on these findings by the appellate court to which the Company has now appealed the verdict, the Company believes the verdict will
“The trial proceeded in March 2016. A jury found the Company liable for $115 million in compensatory damages and $15 million in punitive damages, for a total of $130 million. The defendants filed motions for judgment notwithstanding the verdict, and for a new trial or remittitur of damages, and the plaintiff filed a motion for entry of judgment. Those motions were heard on May 25, 2015, and the Florida state court denied the motions. Gawker
Media appeared before the trial court again on June 10, 2016, but the trial court refused to reduce the bond or allow the Company to post stock or alternative collateral in lieu of a $50 million bond. At a hearing on June 10, 2016, Gawker Media was denied a complete, temporary stay in Florida state court to pursue its appellate rights. Instead, the trial court ruled that it would enter an order proposed by the plaintiff that would permit the plaintiff to begin the process of executing on the judgment by securing liens on Gawker Media’s property. Accordingly, Gawker Media was forced to file its petition for relief under the Bankruptcy Code on an emergency basis.Gawker Media is appealing the $130 million judgment.”
THE CHAPTER 11 CASES
“With no protection from immediate execution of a $130 million judgment against Gawker Media by one litigation creditor whose verdict is subject to appeal, the Company initiated a process to explore its alternatives. The Company hired restructuring and financial advisors and, in consultation with its advisors, determined that seeking chapter 11 relief and selling the Company quickly was in the best interests of the Company and its constituencies.”
“To achieve that goal, the Debtors engaged in a targeted prepetition marketing effort, and entered into a stalking horse asset purchase agreement (the “Stalking Horse APA”) with ZDGM LLC, as buyer (the “Stalking Horse Bidder” or “Buyer”). The Stalking Horse Bidder is an affiliate of Ziff Davis, LLC. Ziff Davis, LLC is a leading global digital-media company operating in the technology, gaming, entertainment and lifestyle verticals. Its brands— IGN, PCMag, AskMen, Speedtest, Offers, ExtremeTech, Geek, Toolbox, TechBargains, Ziff Davis B2B and emedia—produce and distribute premium content across multiple platforms and devices. Ziff Davis, LLC delivers advertising, performance marketing and licensing solutions to thousands of clients worldwide. Ziff Davis, LLC, a subsidiary of j2 Global, Inc. (NASDAQ: JCOM), is headquartered in New York with offices in San Francisco, Los Angeles, Chicago, Seattle, Scottsdale, Austin, Montreal, Basingstoke, London and Sydney.”