Downward angle icon Downward angle icon. Former New York City Mayor Rudy Giuliani speaks to reporters as he leaves federal court in Washington, D.C. AP Photo/Jose Luis Magana Rudy Giuliani dropped his bankruptcy hearing after his lawyers told him he would commit fraud. He owes $152 million, most of it to campaign staff he disparaged. Giuliani scored a legal victory as the bankruptcy judge dismissed the case and said he would likely allow an appeal.
Rudolph Giuliani was so enraged during his bankruptcy hearing Wednesday morning that he interrupted the proceedings to complain that it was “defamatory” to suggest he would hide assets and commit bankruptcy crimes.
Giuliani’s remarks were interrupted just after Rachel Strickland, a lawyer representing two Georgia election workers who were defamed by Giuliani and who are owed $148 million, asked a judge to dismiss the bankruptcy case and let the lawsuit against Giuliani be heard in a different court.
Strickland said taking the case to bankruptcy court would inevitably lead to Giuliani being charged with hiding assets and committing bankruptcy crimes.
“While Mr. Giuliani continues to play golf, we will all be tied up while this court trustee navigates his way through a quagmire of sexual assault and other allegations,” Strickland said in a scathing voice.
Giuliani’s lawyers were in Manhattan bankruptcy court for the hearing, but Giuliani himself participated by phone.
“Ted! Call them and stop it,” Giuliani yelled, apparently referring to his press secretary, Ted Goodman.
“Certainly, someone has a live microphone in their hands and this is not a good situation,” the bankruptcy judge said.
As muffled static continued to come from Mr. Giuliani’s phone line, Judge Sean H. Lane tried to silence it.
“The same phone keeps ringing,” Lane said. “Let me ask the court if I can put that phone on mute.”
“Your Honor, this is Rudolph Giuliani,” Mr. Giuliani said over the static on the phone. He asked for a recess to speak with his lawyers and address Strickland’s “defamatory statements.”
Lane asked Giuliani to wait his turn to speak. Later in the hearing, Giuliani’s lawyer, Gary Fishoff, assured the court that his client would not commit bankruptcy fraud.
“I want to state for the record,” Fischoff said, “there have been some statements that the debtor will commit bankruptcy fraud. So I want to state for the record that Mr. Giuliani, the debtor, is not going to commit bankruptcy fraud.”
Judge says Giuliani’s bankruptcy case is likely to be dismissed
Wednesday’s bankruptcy hearing marks a major turning point in Giuliani’s bankruptcy process, and it could actually lead to him scoring a major legal victory.
Giuliani filed for Chapter 11 bankruptcy protection in December, shortly after a Washington, D.C. jury awarded him $148 million in damages for defaming two election workers, Ruby Freeman and Wondrea Moss, who falsely claimed they rigged votes in the 2020 election.
The bankruptcy filing allowed their lawyers to suspend enforcement of judgments that account for nearly the entire $152 million he owes.
All other civil lawsuits against Mr Giuliani were also suspended, including a sexual abuse suit by Noel Dunphy and a separate defamation suit by election technology company Dominion Voting Systems.
Over the past seven months, Giuliani has been trying to buy time by filing motions to delay the bankruptcy proceedings as he appeals the $148 million judgment.
At the same time, creditors have accused Giuliani of filing misleading and incomplete financial statements and hiding his sources of income.
Authorities have asked Lane to appoint a Chapter 11 bankruptcy trustee, who would have the power to seize legal control of Lane’s assets and sell them to repay all his creditors. The trustee could also waive attorney-client privilege on Giuliani’s behalf, potentially exposing him to further legal risk.
Ruby Freeman’s mother, Ruby Freeman, comforts her as she testifies before a House committee investigating the Jan. 6 attack on the U.S. Capitol. Photo by Associated Press/Jacqueline Martin
But in court filings this week, lawyers for Giuliani, Freeman and Moss all agreed that the best course of action would be to dismiss the bankruptcy case altogether.
Giuliani has agreed not to file for bankruptcy again for a year, buying time to complete his appeal of a $148 million defamation judgment, according to people familiar with the matter.
“It is in creditors’ interests that their claims be heard in a forum of their choice rather than in bankruptcy court,” Strickland said at Wednesday’s hearing.
“We’ve had challenges with transparency in this case,” Lane said, adding that he intends to consent to the bankruptcy filing and dismiss it.
“Continuing the litigation on 11 with a receiver isn’t going to magically change the situation,” Lane said.
The judge said the Chapter 11 bankruptcy trustee could easily sell Giuliani’s two apartments and jewelry, which make up the bulk of his estimated $8 million assets.
But liquidating Giuliani’s other assets, including a media company and a coffee business, would be difficult to separate from the former New York mayor’s personal brand, the judge said. Disposing of those assets would be costly and could ultimately mean money disappearing from creditors’ pockets, the judge said.
Philip Dublin, an attorney representing Dunphy and other creditors in the bankruptcy, including Dominion, opposed the plan.
He said the best way to ensure a fair division of Giuliani’s assets would be to appoint a Chapter 11 bankruptcy trustee and liquidate his assets.
But Strickland said his clients come first and they want the case dismissed.
“We are a significant focus of this litigation,” she said. “We are $148 million.”
The judge said he would issue an order by Friday and asked the parties to meet to discuss how to pay third-party discovery firms that have been working for months to obtain and organize Giuliani’s records for the case.
Lane also said he would not approve Giuliani’s preferred backup plan to change his bankruptcy from Chapter 11 to Chapter 7, which would allow him to save for future income while liquidating his current assets.
Justin Kelton, an attorney representing Dunphy, told Business Insider that even if the judge dismisses the bankruptcy case, Dunphy will likely continue to pursue her sexual abuse claims in court.
“Our client, Noelle Dunphy, remains as strong and unwavering as ever in her commitment to pursuing justice,” he said. “Even if Mr. Giuliani’s bankruptcy is dismissed, she will continue to pursue her claims in court, and we look forward to presenting this case to a jury.”
Giuliani sparked a firestorm of criticism after falsely claiming that the 2020 election results were rigged.
The former U.S. attorney and personal lawyer for Donald Trump is facing numerous civil lawsuits, as well as being disbarred in New York and on the verge of losing his license to practice law in Washington, D.C.
He also faces two criminal charges in Georgia and Arizona for attempting to overturn the results of the 2020 election in those states.
