(Photo by Alex Wong/Getty Images)
Rudy Giuliani is falling on his ass, and not just at the RNC. The man has actually managed to get his bankruptcy case un-dismissed, and appears to be well on the way to getting hauled into court and forced to explain under oath exactly how and why he diverted assets away from his creditors in bankruptcy.
“I’m a patient man, but there are several ways to do this,” US Bankruptcy Judge Sean Lane seethed this morning, noting that “there are ways to do this that include having your client sit in that witness box.”
In December, just a week after a jury awarded $148 million to Ruby Freeman and Shaye Moss, the Atlanta poll workers he defamed, Giuliani marched into bankruptcy court in New York and filed for Chapter 11. The purpose of this exercise was never in doubt — Giuliani hoped to stay collection of the judgment pending appeal without having to post a bond.
And he was partially successful, in that Freeman and Moss were indeed barred from attaching everything he owns. But Judge Lane refused to lift the automatic stay to allow Rudy to prosecute his appeal, partly because the former mayor seemed to have his hands full already. It seems not to have occurred to him when he voluntarily filed for bankruptcy that he’d have to file monthly financial disclosures — accurately! with documentary support!
Citing Giuliani’s complete failure to comply with his disclosure obligations, the creditors moved for sanctions and the appointment of a trustee. Giuliani countered with a motion to convert his case to a Chapter 7 liquidation, before changing his mind just two hours before the scheduled hearing, and moving instead to have his case dismissed.
This was entirely acceptable to Freeman and Moss, who are in a position to collect today. Rudy’s many other creditors, particularly those who have pending lawsuits against him, objected, predicting the proverbial “race to the courthouse.”
But Judge Lane is not in the business of babysitting debtors who have no interest in actually complying with court orders, so on July 11 he entered a ruling in favor of dismissal. The blistering ruling excoriated Giuliani for his blatantly false and deficient filings and instructed the parties to come up with a dismissal order agreeable to all involved before a hearing set for 11:30 this morning.
That … did not happen.
Freeman and Moss’s counsel submitted a proposed order that would have required Giuliani to transfer “all funds in his savings and checking accounts as of July 11, 2024, not to exceed $350,000.00” to the court clerk to pay the administrative fees of Global Data Risk LLC, the forensic accountant the creditors hired to chase down the money Rudy was hiding in his various LLCs.
Giuliani countered that GDR should be given an IOU that it could take to the state of New York and enforce as a lien against the future sale of his Manhattan condo. In a letter to the judge, he complained that the terms of Freeman and Moss’s proposed order were “onerous, punitive, and overreaching.”
The suggestion that bankruptcy expenses should be converted to normal debts upon dismissal of the proceeding did not sit well with the court.
“I have to deal with the administrative expenses now,” Judge Lane said incredulously, instructing the parties to “Have a discussion, and try to reach an agreement,” and then come back after lunch.
But when the parties reconvened, they were no closer to resolution.
“The debtor is up to Giuliani shenanigans yet again,” Freeman and Moss’s lawyer Rachel Strickland complained, noting that the only account information they’d been able to shake loose showed that Giuliani had spent approximately $30,000 of the $60,000 balance in that one account since the hearing on the 11th.
Rudy’s lawyer Heath Berger protested that it was hard to get ahold of his client, who is currently drunk uncling all over the RNC in Milwaukee (slight paraphrase). And he defended Giuliani using his cash to get current on his condo fees since the condos are an estate asset, forgetting that when you’ve asked a judge to dismiss your bankruptcy case, there are no estate assets.
This had the approximate effect of waving a red flag in front of a bull.
Calling Giuliani’s unauthorized distributions “unbelievable and uniquely unhelpful,” the court warned that “if your client persists in this course of action, which is to contest this expense, there are a lot of bad things that can happen.”
“Even for a dismissal which your client wants … he can’t get out of his own way,” the judge fumed, ending with an admonition that Rudy’s lawyers need to have a “come to Jesus” talk with their guy and get back to the court by noon tomorrow and explain their exit strategy, or else they’re going to wind up having the judge withhold the dismissal order and unwind this thing himself. And they will not like it.
“I’m going to ponder what I’m going to do, and you should ponder what you’re going to do. And you’re going to give me an update tomorrow,” Judge Lane said ominously, adding that “I strongly strongly urge you and your client to sit down and figure out what you want the end game to look like here.” He then set an “appropriately theatrical” (his words!) deadline of “high noon tomorrow” for the parties to file an updated order on the court’s docket.
Well! Clearly the guy who fell ass backward into a nine-figure defamation verdict will have the wherewithal to pull it together in the next 20 hours and show the court he’s got a credible plan.
In re Rudolph Giuliani [Bankruptcy Docket via Court Listener]
Liz Dye lives in Baltimore where she produces the Law and Chaos substack and podcast.
#Rudy #Stumbles #Bankruptcy
