Update 6/10: After a judge denied a stay of proceedings to appeal the $140 million decision awarded to Hulk Hogan last March, Gawker was forced to file for Chapter 11 bankruptcy to protect Hogan from seizing their assets. Politico's Peter Sterne reports:

In March, Hogan won a $140.1 million judgment against Gawker Media, CEO Nick Denton and former Gawker.com editor A.J. Daulerio. Following the trial, Gawker asked the presiding judge, Pamela Campbell, to either reduce the judgment or issue a routine stay to give them time to appeal the judgment. In May, Campbell upheld the full amount of the judgment. On Friday morning, she denied Gawker's request for a stay…

Though it's filing for bankruptcy, Gawker has no plans to cease its operations. The company will continue to operate as normal while the bankruptcy process proceeds and it appeals the Hogan judgment.

[Politico]

This, of course does not mean that Gawker is shutting down. Filing for Chapter 11 just opens up court-sanctioned restructuring, and the ability to legally negotiate with your creditors — namely Hulk Hogan. Recode's Peter Kafka explains:

Gawker has told it employees it still plans to fight the Thiel/Hogan case and to operate its publishing business while it does so. But it is also now formally entertaining offers to buy the company and says it has a firm bid from publisher Ziff Davis to buy the entire operation for less than $100 million. Gawker and its banker Mark Patricof assume that the company will eventually see higher bids while it is in bankruptcy protection. Last year, in advance of the Hogan trial, Denton figured his company was worth something in the $250 million to $300 million range.

[Recode]

A memo from Ziff Davis CEO Vivek Shah obtained by Recode further explains what will happen next: A court-sanctioned auction of Gawker Media.

Ziff Davis has entered into an asset purchase agreement to acquire all of these properties (free of GMG's liabilities), subject to the outcome of a Court-supervised auction. Under the Chapter 11 process, the Bankruptcy Court will soon set a schedule for other potential bidders to enter the sale process. There will then be an auction, which will likely take place at the end of July. In the event we become the acquirer, the additions of Gizmodo, Lifehacker and Kotaku would fortify our position in consumer tech and gaming. With the addition of Jalopnik, Deadspin and Jezebel, we would broaden our position as a lifestyle publisher. Much like us, GMG is heavily active in driving commerce-based revenues and has an impressive publishing and commerce platform with Kinja. As you can see, there's a tremendous fit between the two organizations, from brands to audience to monetization. We look forward to the possibility of adding these great brands – and the talented people who support them – to the Ziff Davis family.

[Recode]

Surprisingly, or perhaps not, among the various Gawker media properties Shah voiced interest in purchasing, Gawker — the actual website — is not mentioned.

Last month, Forbes dropped a story alleging that billionaire Silicon Valley mogul Peter Thiel — a PayPal co-founder and a board member at Facebook — has been bankrolling a series of lawsuits against Gawker, including Hulk Hogan's recent suit against the media outlet.

While Thiel's actions appear to be perfectly legal, the idea of the super rich policing the media through costly lawsuits is a frightening one — here's what's going on.

Update: Thiel Confirms His Involvement

"I am proud to have supported Terry Bollea in his successful fight against a bully's gross violation of privacy," Thiel said in a statement to CNNMoney. "Gawker, the defendant, built its business on humiliating people for sport," he said. "They routinely relied on an assumption that victims would be too intimidated or disgusted to even attempt redress for clear wrongs. Freedom of the press does not mean freedom to publish sex tapes without consent. I don't think anybody but Gawker would argue otherwise."

[CNNMoney]

Gawker Owner Nick Denton Reportedly Suspected A Benefactor Might Be Behind Hogan's Suit

[I]n recent weeks, in the face of several new lawsuits brought against Gawker that are unrelated to Mr. Hogan's case and seem to personally attack certain Gawker writers, Mr. Denton is having second thoughts. All of the new cases, like Mr. Hogan's, were brought by Charles J. Harder, a Los Angeles-based litigator, working on a contingency basis, who has most likely run up huge legal bills and expenses. Gawker has said it has already spent as much as $10 million on its side of the case. Mr. Denton has begun to question whether Mr. Harder has a benefactor, perhaps one of the many subjects of Gawker's skewering coverage.

[New York Times]





And A Law Blog Had Speculated In March About The Theory, Based On Some Odd Decisions By Hogan's Team

Gawker has long been one of the most detested and despised media entities in the country. Particularly by the rich and powerful. So what if someone was encouraging Hogan and his attorneys not to settle. What if said person wanted to see Gawker suffer even at significant cost to him/her? We received a tip that certain Tampa lawyers believe a benefactor agreed to cover Hogan's legal fees in some capacity. I have no idea if it's true but it sure would explain a lot of the seemingly inexplicable in this already bizarre case.

[Law Newz]

Thiel's Actions Are Likely Tied To Gawker Outing Him

In 2007, Gawker Media's tech-industry gossip site, Valleywag, outed powerful Facebook investor Peter Thiel as gay, in a post bluntly headlined "Peter Thiel is totally gay, people." In the comments, Gawker founder Nick Denton wrote that the tech billionaire "was so paranoid that, when I was looking into the story, a year ago, I got a series of messages relaying the destruction that would rain down on me, and various innocent civilians caught in the crossfire, if a story ever ran."

[New York Magazine]

And They Aren't Illegal

It is not illegal for an outside entity to help fund another party's lawsuit, and the practice, known as "third-party litigation funding" has become increasingly common in the U.S. Typically, the outside party negotiates for a defined share of any proceeds from the suit. It is unclear how Thiel became connected to Hogan or Harder or if Thiel, who is worth $2.7 billion by FORBES' estimates, is the only outside financial backer of the cases against Gawker. It is also unknown whether Thiel will see any of the proceeds won by Hogan in a Florida court. Gawker is currently appealing that ruling.

[Forbes]





But They Have Massive Ramifications For Media Freedom

It all comes down to a simple point. You may not like Gawker. They've published stories I would have been ashamed to publish. But if the extremely wealthy, under a veil secrecy, can destroy publications they want to silence, that's a far bigger threat to freedom of the press than most of the things we commonly worry about on that front. If this is the new weapon in the arsenal of the super rich, few publications will have the resources or the death wish to scrutinize them closely.

[Talking Points Memo]





And They Are At Odds With His Public Stance On Journalistic Freedom

[Thiel's] involvement with the Gawker case calls his into question his dedication to another pet project — the Committee for Protection of Journalists (CPJ). In October 2009 the CPJ announced that Thiel had donated a "substantial" amount of money to the non-profit. The group funds legal expenses for journalists who are facing prosecution for their reporting, among other things.

[Quartz]





This Isn't The First Time A Billionaire Has Attempted To Eliminate Negative Coverage Through An Expensive Lawsuit

A few years back, a billionaire businessman and his company filed suit against Mother Jones, after receiving negative coverage in the publication:

This was not a dispute over a few words. It was a push, by a superrich businessman and donor, to wipe out news coverage that he disapproved of. Had he been successful, it would have been a chilling indicator that the 0.01 percent can control not only the financing of political campaigns, but also media coverage of those campaigns… Mother Jones and our insurance company have had to spend at least $2.5 million defending ourselves.

[Mother Jones]