Gawker files for Chapter 11 bankruptcy

The latest chapter in the Gawker/Hulk Hogan saga was written on Friday when Gawker filed for Chapter 11 bankruptcy.

What’s next? Gawker will explore a sale in bankruptcy auction, and the opening bid will be between $90 million and $100 million from digital media company Ziff Davis, which owns IGN among other online outlets. Gawker’s assets are listed at between $50 million and $100 million, while its liabilities are listed at between $100 million and $500 million. $130 million of those liabilities are Hogan’s award in his lawsuit against Gawker.

The filing doesn’t mean Gawker is shutting down tomorrow – in fact, the decision to file for Chapter 11 will allow Gawker to continue operations, per the New York Times.

The person said Gawker had filed for bankruptcy to protect jobs and ensure continued operations. Filing for Chapter 11 stays claims from creditors, including court judgments — meaning Gawker would not need to begin paying Hogan, whose name is Terry G. Bollea. It also allows companies more time and more control as they reorganize themselves.

Here’s how Zero Hedge explained what would happened with the money raised from the auction.

Proceeds from a sale will go into a fund to finance further litigation costs and cover whatever damages may ultimately be leveled following the appeals process, which could take years to resolve. Gawker has said that it expects to ultimately prevail.

Whatever money is left at the end of the legal process will go to Nick Denton, Gawker’s founder who owns most of the company, and other shareholders. Earlier this year, Columbus Nova Technology Partners took an undisclosed minority stake in the media company as it shored up its books for the trial.

The Chapter 11 filing doesn’t mean Gawker is “dead” as many are claiming. The Tribune Company filed for Chapter 11 in 2008, marking the largest bankruptcy in American media history. In 2012, the company was successfully reorganized and emerged from bankruptcy. Several airlines have also filed for Chapter 11 and survived, including Delta and United (though many more airlines filed for Chapter 11 and ceased to be). It’s also not unheard of in the sports world – both the Arizona (then Phoenix) Coyotes and Pittsburgh Penguins went through Chapter 11.

But of course, this isn’t the most ideal outcome that Gawker and its employees could be expected.”The end” isn’t imminent, but it’s one step closer.