Donald Trump’s former lawyer Rudy Giuliani cannot use bankruptcy to avoid a $150 million defamation settlement, a federal judge rules
Rudolph Giuliani’s personal bankruptcy case has been dismissed by a federal judge after nearly seven months of stalled progress, leaving the former New York City mayor without court protection from creditors owed more than $150 million.
Giuliani’s bankruptcy, which has been marked by disputes with creditors over repeated failures to produce complete financial records, cannot proceed, Judge Sean H. Lane of the U.S. Bankruptcy Court for the Southern District of New York said. rule Sixth. Lane said Giuliani’s lack of transparency and failure to make meaningful progress in the Chapter 11 process were valid reasons to dismiss the case.
“When faced with a claim for failure to meet the Bankruptcy Code’s financial disclosure obligations, most debtors would respond by remedying at least some—if not all—of the deficiencies. In contrast, Mr. Giuliani did nothing,” Lane said.
It remains unclear how Giuliani will deal with his mounting debts outside of bankruptcy and the continuation of lawsuits that have been put on hold due to his Chapter 11 case. Creditors, including two Georgia 2020 election officials who won a $148 million defamation judgment against Giuliani, will be forced to return to civil court to try to recover what they can.
The judge wrote that dismissing the bankruptcy was “in the best interests of creditors.”
$10 million worth of property, $148 million in damage
Donald Trump’s former lawyer filed for bankruptcy in December with a reported $10.6 million in assets after being hit with a $148 million defamation judgment for falsely accusing two Georgia poll workers of tampering with 2020 election ballots.
One of the election officials—Wandrea’ Arshaye “Shaye” Moss—served on the official creditors’ committee that requested the appointment of a trustee to oversee Giuliani’s case. However, Moss pushed for the bankruptcy filing to be dismissed as the case dragged on.
Lane said in his decision that Giuliani’s “uncooperative behavior” would likely not change even if the appointee were a trustee.
Giuliani’s downfall into bankruptcy marks a fortunate turn of events after a successful career as a federal prosecutor, politician and then partner at major law firms reportedly earning as much as $6 million a year. Giuliani ran into legal and financial trouble after Trump’s failed 2020 presidential re-election campaign, in which he led a Trump-backed legal effort to overturn the vote.
Doubts about election results
Giuliani’s efforts to cast doubt on the 2020 election results have led to the suspension of his law license, criminal indictments and multiple high-profile defamation lawsuits, including those filed by voting machine manufacturers US Dominion Inc. and Smartmatic.
He also faces sexual harassment and assault charges filed by his former employee, Noelle Dunphy, who sued Giuliani for $10 million last year and was later appointed to the creditors’ committee.
During the bankruptcy, Giuliani unsuccessfully appealed a $148 million judgment against Moss and her mother, Ruby Freeman.
Before the case was dismissed, Lane was asked to rule on whether Giuliani could use bankruptcy to clear up damages from a defamation lawsuit. A Texas bankruptcy judge ruled last year in a similar case that right-wing conspiracy theorist Alex Jones could not use Chapter 11 to avoid paying $1.4 billion in defamation judgments because bankruptcy law does not allow for the discharge of debts incurred for willful and malicious conduct.
Further complicating efforts to ease his financial burden while under Chapter 11 protection, Giuliani has disbarred from his New York law practice and his WABC radio talk show was canceled for continuing to discuss his discredited theories about the 2020 election on air. He faces a creditor investigation into his recoverable assets and calls to sell his multimillion-dollar mansions in Manhattan and Palm Beach, Fla.
Giuliani is represented in his bankruptcy by Berger, Fischoff, Shumer, Wexler & Goodman LLP. A committee of unsecured creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Georgia election officials are represented by Willkie Farr & Gallagher LLP.
This case is In the Rudolph W. Giuliani caseBankr. SDNY, No. 23-12055, decided 12/7/24.
