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A federal judge has thrown out cash-strapped Rudy Giuliani’s bankruptcy case, opening the door for election workers he defamed to recover tens of millions of dollars owed to them for his baseless allegations surrounding the 2020 election.
Giuliani also failed to change his case from Chapter 11 to Chapter 7 in an attempt to liquidate his assets.
A decision from bankruptcy court judge Sean Lane on Friday came days after Giuliani himself moved to dismiss his case, and after lawyers for the two election workers and other people the disgraced former New York City mayor owes money to had agreed that the move was the best path forward.
The end of his attempts to get bankruptcy protection does not let him off the hook for his mountain of debts. His creditors will still be able to rely on the courts to collect what they’re owed, including pressing for court orders to seize his properties and other assets.
Giuliani’s lawyer Gary Fischoff told the court on Wednesday that dismissing the case would give him the “best chance” of appealing the defamation verdict.
Lawyers for the creditors’ committee asked the court to appoint a Chapter 11 trustee instead, which would mean Giuliani would relinquish control of his finances for the “most equitable outcome” for the creditors, many of whom have not yet resolved their litigation against him.
Those cases have been on pause since Giuliani’s bankruptcy case began. The stays will now be lifted.
In his order on Friday, Judge Lane said the court’s record “reflects Mr. Giuliani’s continued failure to meet his reporting obligations and provide the financial transparency required of a debtor in possession.”
“The lack of financial transparency is particularly troubling given concerns that Mr. Giuliani has engaged in self-dealing and that he has potential conflicts of interest that would hamper the administration of his bankruptcy case,” the judge added.
It has been “impossible” to determine whether his financial arrangements are appropriate “when Mr. Giuliani has completely failed to provide information about them,” Judge Lane added.
Giuliani filed for Chapter 11 bankruptcy protection in December in the wake of a nearly $150 million defamation judgment for his election lies. A bizarre monthslong behind-the-scenes courtroom drama that followed has laid bare his financial state as he battles criminal indictments across the country.
The defamation verdict is among a growing list of legal obligations for Giuliani, including criminal charges in Georgia and in Arizona for his efforts to reverse Donald Trump’s election loss in those states. He also is an unindicted co-conspirator in a federal criminal case surrounding Trump’s attempts to overturn the results of the 2020 election.
A creditors committee navigating his bankruptcy case has repeatedly complained about his “deficiencies in his financial reporting and disclosures,” like discrepancies related to payments on his Florida condo; his “unauthorized payments” to his alleged “girlfriend”; and his failure to comply with discovery requests.
Giuliani also is being sued by voting technology companies Dominion Voting Systems and Smartmatic for defamation. A former Dominion executive has separately sued Giuliani.
Creditors have also separately asked a judge to impose sanctions against him after failing to comply with document requests. This week, the committee’s lawyers accused him of treating “the bankruptcy process as a joke, hiding behind the facade of an elderly, doddering man.”
Wednesday’s hearing was nothing short of chaotic.
Giuliani, who was in attendance via Zoom, interrupted the proceeding after a lawyer for the election workers suggested she would seek jail time for Giuliani’s alleged “bankruptcy crimes.”
“Would someone get them on the phone?” Giuliani yelled, prompting the judge to request he mute his microphone.
But Giuliani didn’t listen and instead insisted the lawyer’s comments were “highly defamatory, your honor.”
In a statement on Friday, Giuliani spokesperson Ted Goodman said Giuliani was unfairly “denied the ability to appeal the grossly unfair $148 million judgement” and claimed that the “whole bankruptcy case was burdened with many of the same voluminous and overly broad discovery requests and other actions — including regular leaks of information — intended to harm the mayor and destroy his businesses.”
‘We will continue to pursue justice and we are confident that — in the long run — our system of justice will be restored and the mayor will be totally vindicated,” he added.
