A federal judge in New York on Friday threw out Rudy Giuliani’s bankruptcy case, paving the way for a litany of creditors, including two former Georgia election workers who won a $148 million defamation claim against him, to pursue and potentially seize his assets.
The decision by U.S. Bankruptcy Judge Sean Lane in the Southern District of New York comes nearly seven months after Giuliani sought bankruptcy protection after he was ordered to immediately pay millions in damages to Ruby Freeman and Shaye Moss, two Georgia women he falsely accused of helping to steal the 2020 presidential election.
Lane’s written ruling came amid claims by Giuliani’s creditors that the former New York mayor and personal lawyer to former president Donald Trump had used the proceedings to hide details about his assets and avoid paying the former election workers.
Friday’s order would allow Freeman and Moss and other creditors to pursue legal remedies to collect money owed to them by Giuliani. It also allows other pending lawsuits against the former mayor that had been frozen by the bankruptcy proceeding to resume, including defamation suits by the voting machine companies Dominion Voting Systems and Smartmatic and a sexual harassment and wage theft claim by former Giuliani associate Nicole Dunphy.
All are part of a committee of “unsecured creditors” that had sought relief in the bankruptcy case.
A committee of other Giuliani creditors had pressed for the bankruptcy case to continue and for a trustee to be appointed to oversee Giuliani’s finances. They argued it would be the only way to get a full and accurate picture of Giuliani’s cash and assets after months in which the former mayor filed inconsistent and incomplete financial statements and failed to turn over financial information about his businesses and other holdings.
Citing suspicions that Giuliani’s stonewalling was an attempt to hide money, lawyers for the creditors hired investigators to look for hidden assets. They sought to question individuals who Giuliani has done business with - including My Pillow CEO Mike Lindell, a fellow election denier and Trump associate who was subpoenaed last month. And they have suggested they could sue parties that Giuliani claims owe him money as part of their effort to recover debts - potentially including Trump.
In a February court hearing, Giuliani claimed Trump still owes him “about” $2 million in unpaid legal fees related to his work seeking to overturn Trump’s 2020 election loss - though he suggested that debt is with the Trump campaign or the Republican National Committee. But in a Feb. 27 court filing, Giuliani noted a possible claim against Trump personally for unpaid legal fees.
In court documents, Giuliani has listed roughly $153 million in debts to at least 20 people and businesses, including Moss and Freeman. A list of top creditors filed in February said Giuliani owes more than $3.7 million in unpaid legal fees to three law firms - though he is disputing some of those bills - and more than $1 million in state and federal taxes.
The former mayor and federal prosecutor has claimed about $11 million in assets - including an estimated $5.6 million New York apartment and a Palm Beach, Fla., condo he has valued at $3.5 million. While Giuliani has put his New York property on the market, he has so far successfully resisted selling his Florida home, with one of his lawyers claiming the sale could render the former mayor “homeless.”
A financial disclosure report filed last month said Giuliani had less than $100,000 in the bank at the end of May and was funding his living expenses through a rapidly diminishing retirement account.
But creditors have repeatedly complained that Giuliani has not filed a complete picture of his net worth, as is required in bankruptcy proceedings, and have sought information on his businesses and investments.
Both creditors and the judge criticized Giuliani for blowing off court deadlines and filing incomplete and inconsistent monthly financial disclosures that have raised questions about his spending and income. In response, Giuliani’s lawyers have cited administrative struggles, including problems hiring an accountant.
“Since day one, Giuliani has regarded this case and the bankruptcy process as a joke, hiding behind the facade of an elderly, doddering man who cannot even remember the address for his second multimillion dollar home and claims impending homelessness if he must sell that second multimillion dollar home,” Philip C. Dublin, an attorney for the committee of creditors, wrote in a July 8 court filing that accused Giuliani of treating the bankruptcy process “with utter disrespect and without accountability.”
In recent weeks, Giuliani has repeatedly shifted legal strategies in the case. In December, he sought Chapter 11 bankruptcy protection, which allows an individual to reorganize and file a plan to pay off debts. But on July 1, Giuliani changed course, asking a judge to reclassify his case under Chapter 7 bankruptcy, which would hand control of his personal and business finances to an outside trustee to liquidate. The request prompted immediate objections from the election workers and other creditors who accused Giuliani of more delay tactics.
On Wednesday, roughly an hour before a hearing on Giuliani’s request, the former mayor abruptly changed position yet again, asking the judge to dismiss the bankruptcy case altogether.
That hearing later turned contentious as Rachel Strickland, an attorney for Freeman and Moss, accused Giuliani of acting in bad faith and using the same delay tactics he had employed in the defamation case, leading her clients to conclude that Giuliani’s bankruptcy case should be thrown out.
Strickland suggested that if the bankruptcy proceedings were to continue, Giuliani could be accused of “knowingly and fraudulently” hiding details about his finances in violation of bankruptcy law and called on the judge to end the case “unless your honor wants to entertain putting America’s mayor in prison.”
That prompted an angry response from Giuliani, who had called into the hearing and tried to respond to Strickland, prompting Lane to admonish him for speaking out of turn. As Giuliani continued to interrupt, arguing Strickland’s comment was “highly defamatory,” the judge threatened to mute his line.
Lane signaled that he was leaning toward throwing out the case, saying that “past is prologue” and that he believed Giuliani would continue to avoid transparency with the court.
Giuliani’s attorneys have argued that throwing the case out will allow the former mayor to appeal the defamation judgment - which the bankruptcy judge had prevented him from doing because the litigation was frozen. But under the judge’s order in that case, Giuliani would have to put up a $148 million bond to pursue the appeal and stave off collection efforts by Freeman and Moss.
It was not immediately clear if Giuliani has the means to do that. Friday’s decision adds to the legal fallout faced by Giuliani since the 2020 election, when he joined Trump and other allies in falsely claiming the election was stolen. He is facing criminal charges in Georgia and Arizona over his role in the effort. Giuliani, who has denied any wrongdoing and continues to insist daily that the 2020 election was stolen, has pleaded not guilty in both cases.
Last week, Giuliani was formally disbarred in New York after a court found he repeatedly made false statements about Trump’s election loss. He is facing a similar possibility in Washington, where the D.C. board that oversees law licensing in May recommended his right to practice law be terminated, citing a “frivolous” lawsuit he filed trying to block certification of Pennsylvania’s 2020 election results.
In May, Giuliani was abruptly fired by New York’s WABC Radio after the station’s owner said the former mayor ignored orders to stop talking about the 2020 election, including claims of fraud and “personal lawsuits relating to those allegations” - removing one of his few sources of regular income, according to bankruptcy documents.
