Gawker Media, Hulk Hogan Step Out of Ring

Gawker Media has rolled away from a body slam by former professional wrestler Terry Bollea, better known as Hulk Hogan.

According to an updated version of the debtor's disclosure statement -- the document outlining what creditors of its estate will receive in its liquidation -- filed on Wednesday, Bollea would receive $31 million in cash under the terms of a settlement. Bollea had won a $140 million judgment against the media company in a Florida state court in March in an invasion of privacy lawsuit. Gawker.com in 2012 had published a portion of a sex tape of him having sex with the wife of a friend, Todd Clem, the radio shock jockey better known as Bubba "the Love Sponge" Clem.

The settlement would put an end to any potential legal drama between Gawker, which once had vowed to pursue a reversal of the judgment, and Bollea. Gawker in court papers attributed its Chapter 11 filing on June 10 to the litigation and not the company's ongoing performance.

The ex-wrestler's legal pursuit against Gawker was secretly financed by billionaire entrepreneur Peter Thiel, the co-founder of PayPal Holdings (PYPL) and Palantir Technologies.

"Even were the Bollea judgment to be reversed, litigating that appeal to judgment would substantially delay any distributions to Gawker Media general unsecured creditors," the debtor said in its disclosure statement. In contrast, the settlement should allow payment in full of general unsecured creditors, excluding postpetition interest, by year's end.

Gawker is set to seek approval of the disclosure statement on Thursday morning in the U.S. Bankruptcy Court for the Southern District of New York. Approval would allow the debtor to send its liquidation plan to creditors for voting.

The settlement, meanwhile, also calls for two other plaintiffs represented by Charles Harder, the lawyer backed by Peter Thiel, to receive payouts.

Freelance writer Ashley Terrill would receive $500,000 in cash. She sued Gawker Media for defamation after Gawker published a story about her allegedly being harassed by one of the co-founders of dating app Tinder in retaliation for her investigation into the company.

Shiva Ayyadurai, a scientist who claims to have invented email, would receive $750,000 in cash. He sued Gawker Media for libel after Gawker wrote a story saying he was not the inventor of the communications platform.

Neither Terrill nor Ayyadurai had won judgments against Gawker Media.

"Yes, we were confident the appeals court would reduce or eliminate the runaway Florida judgment against Gawker, the writer of the Hogan story and myself personally," Gawker Media founder Nick Denton said in a post on his personal website. "And we expected to prevail in those other two lawsuits by clients of Charles Harder. ... But all-out legal war with Thiel would have cost too much, and hurt too many people, and there was no end in sight."

Denton filed for Chapter 11 protection on Aug. 1 to protect himself from a $10 million personal liability he faced as part of the Bollea judgment.

Despite the legal victory, Gawker.com, the site that hosted the article that sparked the suit, is no more.

Univision Communications on Aug. 18 won approval to purchase substantially all of the debtor's assets for $135 million after emerging victorious at auction. Univision, however, declined to acquire the namesake site, though it placed ex-Gawker.com staffers at other blogs that once inhabited the Gawker Media network, such as Deadspin and Gizmodo.

The bankruptcy estate retains Gawker.com. Bollea would receive a pro rata share of the proceeds from any potential sale of the site, while Terrill and Ayyadurai have waived their rights to such distributions.

Gregg M. Galardi and D. Ross Martin of Ropes & Gray are debtor counsel.

If you liked this article you might like

Inside Goldman Tech Conference: Key Takeaways on Bitcoin, Ethereum and ICOs

Inside Goldman Tech Conference: Key Takeaways on Bitcoin, Ethereum and ICOs

Here's the New Hot Trade on Wall Street

Here's the New Hot Trade on Wall Street

PayPal COO Talks to TheStreet About eBay Deal, Growth Plans and Blockchain

PayPal COO Talks to TheStreet About eBay Deal, Growth Plans and Blockchain

Make PayPal Your Friend With This Trade

Make PayPal Your Friend With This Trade

PayPal Finance Chief: Wall Street Need Not Worry About Our eBay Relationship

PayPal Finance Chief: Wall Street Need Not Worry About Our eBay Relationship