- Rudy Giuliani halted his bankruptcy proceedings after a lawyer said he would commit fraud.
- He is $152 million in debt, almost all of which is owed to election officials he defamed.
- Giuliani scored a legal victory as a bankruptcy judge said he would likely dismiss the case and allow an appeal.
Rudy Giuliani exploded in a bankruptcy hearing Wednesday morning, interrupting proceedings to complain that claims he would commit bankruptcy crimes by hiding his assets were “defamatory.”
The interruption came as Rachel Strickland, an attorney representing two Georgia election officials defamed by Giuliani and who owes $148 million, urged a judge to dismiss the bankruptcy case and allow the lawsuit against Giuliani to be filed in a different court.
Defending the case in bankruptcy court would inevitably lead to Giuliani hiding his assets and being charged with bankruptcy crimes, Strickland said.
“We will all be held hostage while the trustees in this court investigate the swamp of sexual assault and other allegations while Mr. Giuliani continues to play golf,” Strickland said scathingly.
Giuliani’s attorneys were present in person in Manhattan bankruptcy court for the hearing, but Giuliani himself called in.
“Ted! Can you get them on the phone and stop—” Giuliani shouted, apparently referring to his spokesman, Ted Goodman.
“Well, someone has a live microphone, and that’s not a good situation,” the bankruptcy judge said.
As muffled voices continued to come out of Giuliani’s phone line, the judge, Sean H. Lane, tried to silence him.
“We keep hearing the same phone call over and over again,” Lane said. “Let me ask the court if we can confirm that the phone was turned off, yes.”
“Your Honor, this is Rudolph Giuliani,” Giuliani said over his cell phone. He asked for time to speak with his lawyer and respond to Strickland’s “defamatory statements.”
Lane asked Giuliani to wait his turn to speak. Later in the hearing, Giuliani’s attorney, Gary Fischoff, assured the court that his client would not commit bankruptcy fraud.
“I just want to state something for the record,” Fischoff said. “There have been some statements that the debtor is going to commit bankruptcy fraud. So I just want to state for the record that Mr. Giuliani, the debtor, is not going to commit any bankruptcy fraud.”
Judge says he may dismiss Giuliani’s bankruptcy case
Wednesday’s bankruptcy hearing comes at a major turning point in Giuliani’s bankruptcy proceedings — one in which he may actually have scored a major legal victory.
Giuliani filed for Chapter 11 bankruptcy in December, shortly after a jury in Washington, D.C., found him liable for $148 million in damages for defaming Ruby Freeman and Wandrea Moss, two election officials he falsely claimed manipulated ballots in the 2020 election.
The bankruptcy filing stops their attorneys from enforcing the judgment against them, which represents nearly the entire $152 million they owe.
The court also temporarily halted all other civil cases against Giuliani, including a sexual harassment lawsuit from Noelle Dunphy and another defamation lawsuit from election technology company Dominion Voting Systems.
For the past seven months, Giuliani has been trying to buy time by filing motions to slow the bankruptcy process as he appeals the $148 million judgment.
At the same time, creditors accused Giuliani of filing misleading and incomplete financial reports, and hiding income streams.
They asked Lane to appoint a Chapter 11 trustee, who would have the authority to take legal control of his assets and sell them to pay off anyone who owes money. The trustee could also waive attorney-client privilege on Giuliani’s behalf, potentially exposing him to further legal risk.
But in court filings this week, attorneys for Giuliani, Freeman and Moss all agreed that dropping the bankruptcy case entirely would be the best course of action.
They said Giuliani would agree not to file for bankruptcy again for another year, allowing time for an appeal of the $148 million defamation ruling to be resolved.
“It is in the creditors’ interest to have their claims heard in a forum of their choosing” and not in bankruptcy court, Strickland said at Wednesday’s hearing.
Lane said he was inclined to agree and dismiss the bankruptcy, citing “the difficulties we have in terms of transparency in this case.”
“It’s not going to magically change if you move the case up to 11 with a trustee,” Lane said.
The judge said the Chapter 11 trustee could easily liquidate Giuliani’s two apartments and jewelry, which make up the bulk of his estimated $8 million estate.
But liquidating Giuliani’s other assets, such as his media company and coffee operations, would be difficult to separate from the former New York City mayor’s personal image, he said. Dealing with those assets could incur costs that would ultimately be passed on to creditors who owe money, the judge said.
Philip Dublin, an attorney representing other creditors in the bankruptcy — including Dunphy and Dominion — objected to the plan.
He said the best way to fairly divide Giuliani’s assets would be to appoint a Chapter 11 trustee who would liquidate Giuliani’s assets.
But Strickland said his clients have priorities — and they want the case dismissed.
“We are the main focus of this case,” he said. “We need $148 million.”
The judge said he would issue an order on Friday and ask the parties to meet and figure out how to pay fees for discovery vendors, third-party companies that have worked 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 convert the bankruptcy process from Chapter 11 to Chapter 7, which would allow him to keep future earnings for himself while liquidating his current assets.
Justin Kelton, an attorney representing Dunphy, told Business Insider that he will continue to fight his sexual harassment claims in court if the judge dismisses the bankruptcy case.
“Our client Noelle Dunphy remains strong and steadfast in her commitment to pursuing justice,” he said. “If Mr. Giuliani’s bankruptcy is dismissed, she will continue to pursue her claims in court, and we hope that one day we will be able to take this case to trial.”
Giuliani has brought much opprobrium upon himself by falsely insisting that the 2020 election results were rigged.
In addition to the various civil cases he faces, the former US attorney and personal attorney for Donald Trump has had his license to practice law revoked in New York and is close to losing his license in Washington, DC.
He was also charged in two criminal cases, in Georgia and Arizona, over his efforts to overturn the results of the 2020 election in those states.
