Rudy Giuliani Falls Ass Backwards Out Of Bankruptcy
Guess he'll have to go back to practicing l— oh wait!
Rudy Giuliani is no longer bankrupt. Now he’s just broke.
This afternoon, US Bankruptcy Judge Sean Lane signed an order dismissing the bankruptcy, which was filed about ten seconds after Giuliani was hit with a $148 million defamation verdict. The jury made Ruby Freeman and Shaye Moss, the Atlanta poll workers falsely accused of ballot fraud, Giuliani’s largest creditors, and this entire exercise has always been about their claim.
Rudy appeared to think that the bankruptcy would redound only to his benefit. He could stay collections on the verdict without having to post a supersedeas bond, while simultaneously pursuing his appeal. And so it came as a nasty surprise when Judge Lane refused to lift the stay on the civil proceedings to allow Giuliani to explain to the DC Circuit all the ways he’d been wronged by Judge Beryl Howell. Indeed, Rudy seemed to find the bankruptcy process shocking in several respects. Who knew there’d be so much paperwork involved in sloughing off your creditors!
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As Judge Lane noted in his order, the debtor “has not fully met his obligation to file certain schedules and lists detailing his financial condition, including a list of creditors, a schedule of assets and liabilities, a statement of current income and current expenditures, and a statement of financial affairs.”
He failed to file monthly operating reports in a timely fashion, and the reports contain obvious errors and omissions. Such as an account which purportedly ended February with a balance of $57,856 and started off March with $52,947. Did he think no one would notice?
He funneled his earnings through LLCs, while ignoring subpoenas for information about his companies, refusing to make “any production at all despite being required to do so by the Rule 2004 Order.” At the same time he entered into undisclosed book and endorsement deals. Rudy Coffee, anyone?
“The lack of financial transparency is particularly troubling given concerns that Mr. Giuliani has engaged in self-dealing and that he has potential conflicts of interest that would hamper the administration of his bankruptcy case,” Judge Lane wrote.
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And Rudy won’t — or possibly can’t — find an accountant willing to work for him, a fact the court called “highly unusual and troubling given that the bankruptcy case has been pending for more than six months.”
Facing motions for sanctions and the appointment of a trustee, and finding his original purpose thwarted, Giuliani moved on July 1 to convert the Chapter 11 reorganization petition to a Chapter 7 liquidation. Here, as in the Alex Jones bankruptcy, the debtor’s antics served to pit the creditors against each other. With a judgment in hand, Freeman and Moss countered that the case should be dismissed. The other creditors, including Dominion Voting Systems and Noelle Dunphy, a former employee who sued Giuliani for sexual assault and various labor torts, disagreed. They wanted the case to stay in Chapter 11 under the supervision of a trustee.
But at a hearing on Wednesday, Freeman and Moss’s lawyer argued persuasively that staying bankruptcy would not lead to an equitable distribution of assets, but rather the dissipation of the entire estate to satisfy administrative fees. Indeed, quite apart from paying lawyers, a forensic accountant has already racked up $400,000 trying to track down Rudy’s assets.
Noting that “past is prologue,” the court saw “little reason to conclude that the Mr. Giuliani’s uncooperative conduct will change after the appointment of a Chapter 11 trustee” and anticipated that a “continued lack of financial transparency would severely hamper the administration of this case by a Chapter 11 trustee, who would be required to incur extensive expense to seek compliance from this recalcitrant debtor.”
“[T]here is a real prospect of unsecured creditors receiving little to nothing in bankruptcy notwithstanding a lengthy delay during which they are prevented from pursuing their rights,” the court wrote, noting that Dunphy and Dominion would likely get nothing even if they got their Chapter 11 Trustee.
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And so Judge Lopez dismissed the case. Rudy now shambles out of bankruptcy after seven months, having wasted millions of dollars of professional fees and gotten himself no closer to overturning the $148 million verdict.
Let’s assume that he’s celebrating with a well-earned scotch. And the Freeman plaintiffs are celebrating with a well-earned writ of garnishment. Drink up!
Giuliani Bankruptcy Docket [Via Court Listener]
Liz Dye lives in Baltimore where she produces the Law and Chaos substack and podcast.
