Indications suggest judge may reject Rudy Giuliani's bankruptcy case

A New York federal judge is poised to dismiss Rudy Giuliani’s bankruptcy case, expressing concern Wednesday that Giuliani has used the proceedings to obfuscate his assets and delay paying a massive defamation penalty to two Georgia election workers.

“I’m leaning toward dismissal, frankly, because I am concerned that the past is prologue,” U.S. Bankruptcy Judge Sean Lane said during a tense hearing, raising concerns that “the difficulties that we’ve encountered in this case in terms of transparency will continue and dog the case.”

Lane’s comments portend a significant victory for the two Georgia women, Ruby Freeman and Shaye Moss, who won a $148 million defamation verdict against Giuliani last year for falsely accusing them of committing election fraud in the 2020 election. Giuliani’s claims, which were amplified by his longtime ally and former client Donald Trump, generated a torrent of threats against the women, forcing them to flee their homes.

A dismissal of his bankruptcy case, their attorney argued, would require Giuliani to liquidate his assets — which include two multimillion-dollar homes — and immediately begin paying off his debts, including to them.

In a court filing just prior to Wednesday’s hearing, Giuliani said he, too, was seeking dismissal of the case, an outcome that would prevent him from facing the possible appointment of a trustee who would control Giuliani’s assets. Giuliani’s attorney, Gary Fischoff, suggested that such a step might cause Giuliani, 80, to opt against working and generating income.

The judge said he intended to issue a final ruling by Friday.

Giuliani, who joined the hearing by phone, grew audibly frustrated at times as Moss and Freeman’s attorney Rachel Strickland ticked through a list of his alleged misdeeds. She accused Giuliani of using his bankruptcy proceedings — initiated just days after the defamation verdict — to shield himself from financial consequences. He’s since repeatedly refused to comply with requirements to disclose details of his income and assets, many of which are obscured in difficult-to-track LLCs.

“He regards this court as a pause button on his woes while he continues to live his life unbothered by creditors,” Strickland said. “If the case is dismissed, creditors will be able to hold America’s mayor accountable for the harms he’s caused.”

As she spoke, Giuliani interjected, calling her comments “highly defamatory” and asking to be heard. Lane interrupted the former New York City mayor, saying he was speaking out of turn and threatening to cut off his microphone if he continued to disrupt the proceedings.

“Sir, everybody gets a chance to be heard,” Lane said.

Though Giuliani’s defamation verdict is by far his largest unpaid debt, he also owes millions of dollars in unpaid legal bills and other costs he’s accrued in recent years. A committee representing all of his creditors urged Lane not to dismiss the case but instead to appoint a monitor to run Giuliani’s finances.

Philip Dublin, an attorney representing the committee, said that if the case were dismissed, Freeman and Moss would likely reap the benefits of Giuliani’s asset sales while other creditors might be out of luck.

But Strickland countered that Giuliani’s continued and repeated defamation of the two women — which continued even after his defamation verdict — were required by law to take precedence over his other unpaid debts. Rather than waste millions of dollars paying a court-appointed monitor and extending the proceedings indefinitely, Strickland said, dismissal would ensure that most of the proceeds of Giuliani’s asset sales were steered to his creditors rather than to the court for administrative costs.

In addition, she noted that Giuliani is facing numerous other lawsuits, including one by a former employee alleging rampant sexual harassment, which would have to be handled by the bankruptcy court if Lane decided to keep the case alive. Those issues are far outside the expertise of bankruptcy judges, she noted.

“It’s time,” Strickland said, “for Mr. Giuliani to go back to the real world.”