US judge may end Giuliani bankruptcy, exposing ex-Trump lawyer to lawsuits

[July 11, 2024]  By Dietrich Knauth

NEW YORK (Reuters) -A U.S. judge on Wednesday said he would likely end Rudy Giuliani's bankruptcy, a move that would enable lawsuits for defamation, sexual harassment and other claims to proceed in other courts against Donald Trump's former lawyer.

U.S. Bankruptcy Judge Sean Lane said at a court hearing in White Plains, New York, that he would rule Friday on competing requests from Giuliani and his creditors about the future of his bankruptcy.

Giuliani, 80, filed for bankruptcy protection in December after a Washington, D.C. court ordered the former New York City mayor to pay $148 million to two Georgia election workers that he falsely accused of rigging votes in the 2020 presidential election which was won by Democrat Joe Biden.

The bankruptcy prevented the election workers from collecting on that judgment, while freezing other lawsuits stemming from Giuliani's work for Trump, the former Republican president, as he sought to overturn his loss in the 2020 election.

Last week, Giuliani asked to convert his personal bankruptcy case into a straightforward liquidation, which would force him to sell nearly all of his assets. One group of creditors asked Lane to appoint a trustee to take over Giuliani's finances and businesses, which could lead to a lengthy and contested bankruptcy liquidation, while another group said Giuliani should be kicked out of bankruptcy altogether.

All three options pose significant risks for Giuliani.

Lane said dismissal was likely the best option, given the difficulties the court has had in getting straight answers from Giuliani about his finances. A trustee would likely face the same problems getting Giuliani's cooperation, while incurring additional expenses that would reduce Giuliani's ability to pay creditors, Lane said.

"I'm concerned that the difficulties we've encountered on transparency will continue," Lane said.

A dismissal of his bankruptcy would allow Giuliani's creditors to resume lawsuits against him, but it would also give him more freedom to appeal the $148 million defamation judgment that forced him to seek bankruptcy protection.

"We believe that the debtor's best chance of getting an appellate determination would be dismissal," Giuliani attorney Gary Fischoff said during Wednesday's court hearing.

Former New York Mayor Rudy Giuliani departs the U.S. District Courthouse after he was ordered to pay $148 million in his defamation case in Washington, U.S., December 15, 2023. REUTERS/Bonnie Cash/File Photo

Lane previously stopped Giuliani from spending money on the appeal while he was bankrupt, saying his Chapter 11 filing had paused litigation on both sides.

Rachel Strickland, representing the former Georgia election workers Wandrea "Shaye" Moss and her mother Ruby Freeman, said Giuliani should be kicked out of bankruptcy so her clients can try to collect on their judgment against him.

Giuliani "regards this court as a pause button on his woes while he continues to live his life unbothered," Strickland told Lane.

Moss and Freeman, who are Black, faced a deluge of racist and sexist messages, including threats of lynching, after Trump and his allies spread false claims that they were engaged in voter fraud.

A committee representing Giuliani's other creditors asked Lane to instead appoint a trustee to take over Giuliani's finances and businesses, like his podcasting engagements and coffee promotions. Committee attorney Phil Dublin said ending the bankruptcy now would create a "race to the courthouse" among the many people who have sued Giuliani.

Giuliani's other creditors include former employee Noelle Dunphy, who has accused Giuliani of sexual assault and wage theft, and the voting machine companies Dominion and Smartmatic, who have also sued Giuliani for defamation. Giuliani has denied the allegations.

In addition to the civil lawsuits, Giuliani is facing criminal charges in Georgia and Arizona for aiding Trump's efforts to subvert the 2020 election results, and his false claims about the election have caused him to lose his license to practice law in New York.

(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and David Gregorio)

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