On Tuesday, July 5, 2016, lawyers representing Hulk Hogan alleged that Gawker Media LLC secretly loaned Nick Denton, Gawker’s founder and CEO, $200,000 to pay for personal bankruptcy counsel. Gawker and Denton are jointly liable for the $140 million judgment in the Hogan case, with Denton personally liable for an additional $10 million in punitive damages. The accusations come as Gawker navigates through Chapter 11 proceedings and the anticipated sale of its assets.
Lawyers for Hogan are seeking to defeat an attempt to convert a temporary restraining order, protecting Denton from Hogan’s collection on the judgment, into a preliminary injunction. Hogan’s court filings suggest that on or around June 10, Gawker Media gave the loan to Denton while negotiating the terms of its bankruptcy financing, a “very unusual” step for a company preparing for bankruptcy. Hogan alleges that Denton made misrepresentations to the Florida bankruptcy court by burying the loan documentation into papers concealing the transactions.
Gawker continues to defend Denton, arguing that pursuing the collection efforts against the CEO would be detrimental to the company on the asis of this important link. Gawker has indemnified Denton, thus making Gawker liable for Denton’s judgment. Hogan, however, criticizes this view, asserting that the indemnification agreement precludes Denton’s misconduct and gross negligence in the sex-tape case. Further, Gawker contends that Denton is indispensable to the company, especially during the bankruptcy proceedings. Hogan, however, finds this to be false, as Gawker managed to function without Denton throughout the trial. Additionally, the Gawker sale will be handled by Houlihan Lokey Capital Inc., Chief Restructuring Officer William Holden, and other professionals, leaving Denton with a diminished role in the company’s operations.
If the preliminary injunction is not granted, Denton will need to file for personal bankruptcy.