One way or another, Rudy Giuliani’s ability to leverage bankruptcy to maintain control of his finances appears to be coming to an end.
But the question remains: what comes next?
U.S. Bankruptcy Judge Sean Lane, in a hearing Wednesday, is expected to address three competing proposals from Giuliani and his creditors, any of which would drastically change the status quo after months of escalating tensions.
Giuliani filed for Chapter 11 bankruptcy protection in December after two Georgia election officials won a $148 million defamation judgment against Trump’s mayor-turned-lawyer for spreading a baseless conspiracy that they were involved. in mass voter fraud in 2020. Giuliani vowed to appeal.
Without mincing words, his creditors portrayed Giuliani’s Chapter 11 proceedings as a delaying tactic to maintain control of his finances while avoiding paying the sum.
“From day one, Giuliani considered this case and the bankruptcy process a joke, hiding behind the facade of an elderly, trembling man,” a committee of creditors wrote in court documents archived Monday.
So far, Giuliani’s creditors have remained united. They accused Giuliani of egregious spending, hiding assets and stalling progress. They increasingly brought concerns to a head, filing motions seeking sanctions and an independent administrator to take control.
But as the bankruptcy case reaches a crossroads this week, the judge must now face an emerging divide among those trying to hold the former federal prosecutor to account.
The two Georgia election workers — Ruby Freeman and her daughter, Shaye Moss — have changed their plan to appoint a Chapter 11 trustee. They now want to rule out Giuliani’s bankruptcy entirely.
“Rudolph Giuliani’s bad faith now justifies the dismissal of this case. For more than six months, the Freeman plaintiffs waited patiently while Mr. Giuliani abused the Chapter 11 process by pursuing a self-serving, delay-oriented strategy,” Rachel Strickland, their attorney, wrote in court documents Monday.
Releasing Giuliani from bankruptcy would allow the mother-daughter duo to begin executing their $148 million judgment. But it could leave out other creditors – who have not embraced the election workers’ new idea – competing for Giuliani’s assets.
At Wednesday’s hearing, Lane is expected to weigh the two proposals along with another proposed by Giuliani.
After weeks of fending off calls for oversight from creditors as those efforts gained traction, Giuliani changed tack.
Last week, Giuliani personally signed a motion to convert his bankruptcy to Chapter 7. The move moves away from proposing a Chapter 11 reorganization plan to instead liquidate his assets, effectively removing Giuliani’s control over the your finances.
This signaled a sudden turnaround. Just two weeks earlier, Gary Fischoff, Giuliani’s lawyer, said his client was “moving forward with purpose and direction” in Chapter 11.
O movement of a page abandoning this plan contained no explanation. Ted Goodman, a spokesman for Giuliani, released a statement indicating that Giuliani was “simply following the options available.”
“I can promise you that. No matter what they do, they cannot take away Mayor Giuliani’s most important assets: integrity, courage and love for America,” Goodman said.
At a hastily scheduled hearing to settle things, Fischoff told the judge that the motion “speaks for itself” and asserted that his client has the absolute right to convert to Chapter 7.
His creditors cite more cynical reasons.
“We don’t have a bona fide debtor. He behaved badly at every stage,” said Philip Dublin, a lawyer representing a committee of creditors, at last week’s hearing.
The committee of creditors includes as members Moss, one of two Georgia election workers; Dominion Voting Systems, a voting machine company that also sued Giuliani after the 2020 election; and Noelle Dunphy, a former Giuliani employee who sued him alleging sexual assault, harassment and failure to pay wages.
Conversion to Chapter 7 could make it more difficult for creditors to access Giuliani’s income he earned after filing for bankruptcy, such as proceeds from his now-suspended radio show and new coffee deal.
Creditors also say it is no coincidence that Giuliani’s maneuver came three days after his motion to compel him to produce documents and seek sanctions — in addition to the existing effort to appoint an independent trustee.
Giuliani’s proposal would sideline the committee of creditors and his legal team, which spent months familiarizing themselves with and investigating the former New York City mayor’s finances.
“Giuliani may have seen the writing on the wall and come to the conclusion that if he is deposed as a debtor in possession, then he could very well rid himself of the Committee and its investigation by leaving and, among other things, obtain the benefit to further delay the release of its financial and business records,” Dublin wrote in the committee’s objection filed Monday.
The committee also invoked Giuliani’s recent expulsion in New York.
“The New York Supreme Court ruling on Giuliani’s expulsion could easily have been written about Giuliani and his bankruptcy case. This cheating is what he does and who he is,” Monday’s lawsuit said.
At Wednesday’s hearing, the judge will choose the path forward. He could accede to Giuliani’s request to convert the bankruptcy to Chapter 7, accept the committee’s proposal to appoint a Chapter 11 trustee, or agree with election workers to abandon the bankruptcy entirely.
Equally notable is that no one proposes maintaining the status quo any longer.
This story originally appeared on thehill.com read the full story
