Judge rejects Rudy Giuliani’s bankruptcy

A judge dismissed Rudy Giuliani’s Chapter 11 bankruptcy on Friday, removing a shield that for six months froze two Georgia election workers’ efforts to collect their $148 million defamation judgment.

The former mayor of New York had long resisted growing pressure from his creditors. But in recent days he consented to his dismissal after increasing claims that he acted in bad faith and could be held liable for bankruptcy crimes, charges Giuliani denies.

On a 22-page decision issued on Friday, U.S. Bankruptcy Judge Sean Lane dismissed the bankruptcy, citing Giuliani’s “continued failure” to provide financial transparency.

“Mr. Giuliani has failed to provide an accurate and complete picture of his financial affairs in the six months this case has been pending. Transparency in Mr. Giuliani’s finances has proven to be an elusive goal,” Lane wrote.

It ends a half-year detour that began after two Georgia election workers, Ruby Freeman and her daughter, Shaye Moss, prepared to collect the jury’s $148 million defamation verdict over Giuliani’s baseless conspiracy that the pair committed mass voter fraud in 2020. Giuliani has vowed to appeal.

The Chapter 11 filing automatically froze the case and Giuliani’s other civil proceedings, while allowing him to maintain control of his assets so he could propose a reorganization plan – which never came to light.

Giuliani’s creditors have long viewed bankruptcy as a delaying tactic, accusing him of hiding assets and blatant spending. Election workers insisted that bankruptcy law would have ultimately prevented the former federal prosecutor and Trump lawyer from carrying out the surprising ruling.

In his ruling, Lane called Giuliani’s struggle to retain an accountant “a clear red flag,” chastising the gaps in his financial reporting. The ruling prevents Giuliani from filing for bankruptcy again next year.

“When faced with complaints about failure to comply with Bankruptcy Code obligations regarding financial transparency, most debtors will respond by curing at least some – if not all – of the defects. On the other hand, Mr. Giuliani did nothing,” Lane wrote.

By closing the bankruptcy, as election workers requested, the original process will unfreeze and once again leave the pair free to try to collect their money.

However, they are likely to recover much less than the $148 million as a result of Giuliani’s limited pool of assets, which primarily includes his properties in New York and Florida. Attorneys for election workers argued that the process in the bankruptcy system would instead send much of the available funds to professional fees.

“It is in the interest of creditors, of this man’s victims, that their claims be heard in the forums of their choosing, which are in a better position than the bankruptcy court to hear and decide those claims. If the opposite happens, and we remain in Chapter 11, the cost of this process will continue to increase,” said Rachel Strickland, attorney for the mother-daughter duo, at a hearing this week.

But the dismissal could sideline other creditors whose cases against Giuliani remain in the early stages.

To strengthen its prospects, the official committee of creditors wanted to remain in the bankruptcy system, but remove Giuliani’s control over its finances, appointing an independent administrator. The committee’s other members include voting machine company Dominion Voting Systems, which also sued Giuliani over 2020 election conspiracy theories, and Noelle Dunphy, a former employee of the former mayor who sued him alleging sexual assault, harassment and nonpayment of salaries.

“If the case remains in Chapter 11, with the oversight of Your Honor, the trustee and the committee, we can do everything we can to ensure that there is an equitable distribution of that amount to the people who have been harmed by the debtor,” Phil Dublin, lawyer representing the committee, at this week’s hearing.

The judge opted against that option, writing in Friday’s ruling that “there is little reason to conclude that Mr. Giuliani’s uncooperative conduct will change following the appointment of a Chapter 11 trustee.”

Giuliani long resisted increasingly drastic proposals from his creditors as frustrations mounted, saying as recently as last month that he was still determined to come up with a reorganization plan to emerge from Chapter 11 bankruptcy.

But with mounting pressure and the judge’s repeated refusals to allow Giuliani to appeal the defamation ruling while the mother-daughter duo’s ability to collect the money remains frozen, the former New York mayor has finally agreed to dismiss his bankruptcy. .

Updated at 3:58 pm EDT

This story originally appeared on thehill.com read the full story