looks like Gawker is filing for chapter 11; not that I’d be sad to see Gawker media go down in flames, but is it possible this is “strategic” to try to minimize the impact of the damages awarded to Hulk Hogan?
http://www.cnbc.com/2016/06/10/gawker-media-files-for-ch-11-bankruptcy-protection.html
Yes. its a strategy to be the best outcome for Nick Denton, although it exists so that it ensures the best outcome for the creditors.
Chapter 11, which in academic terms is “administration” which means “supervised”… a second opinion, court orders, court approvals, tries to keep it all honest …
A “strategy” for a business owner is to get rid of the debt but keep the money …eg assets.
Administration protects the business owner from accusations that expenditure (whether day to day or special … or merely on paper… ) was actually asset stripping and otherwise paying himself the cash flow rather than the profit.
Administration allows a business to be sold as a going concern, which is important to for a relatively asset-less operation like Gawker Media… liquidation means selling the computers and the office furniture separately - even the NAS sold seperately to the application that makes use of the data on the NAS… Administration means the organization is sold with all the staff, leases , servers working and plugged in and so on.
What’s the alternative? Attach the guy’s house and car and retirement account? Debtor’s prison? Seriously, if legal judgements aren’t covered under bankruptcy, how do you propose to collect the pound of flesh?
(If you can pierce the corporate barrier, then you can renew the collection of the judgement against the guy himself if he ever comes into any money. But the corporation, once bankrupt, doesn’t have any assets for you to take. You can’t get blood out of the turnip.)
The question and answers so far allude to multiple concepts, or whether a debt (a) is dischargeable vs. nondischargeable in bankruptcy, (b) can vs. can’t be collected from the owners of a corporation or other limited liability entity (“piercing the corporate veil”), (c) gets paid by selling an intact operating business vs. liquidating its individual assets, and (d) gets vs. doesn’t get “priority”, so that no lower-priority creditors get paid until that debt is paid in full. These are independent, and I think all or almost all of the 2^4 possible cases can actually occur. (Is there a category of nondischargeable, nonpriority debt that corporations can incur?)
I suspect that the answer to the original question (dischargeable vs. nondischargeable) probably doesn’t matter here. In Gawker’s bankruptcy petition, the judgment is the biggest debt by many orders of magnitude. So regardless of whether the judgment gets priority, and regardless of whether it’s dischargeable (assuming the entity in bankruptcy really gets limited liability, of course), the net result, if the judgment is upheld, is that Hulk Hogan owns ~100% of Gawker. I’m not a lawyer, though.
Some categories of judgments are generally not dischargeable. Child support, certain personal injuries, amounts owed to government (taxes, criminal fines), and of course student loans.