Rudy Giuliani is facing significant challenges in bankruptcy court as he seeks to avoid paying a $148 million defamation judgment awarded to Atlanta poll workers Ruby Freeman and Shaye Moss. Giuliani’s situation parallels that of Alex Jones, with both individuals filing for bankruptcy to discharge large defamation awards. However, unlike Jones, Giuliani’s bankruptcy strategy has faced immediate setbacks.
The court, led by US Bankruptcy Judge Sean Lane, blocked Giuliani from appealing the defamation judgment while his Chapter 11 reorganization is ongoing. Furthermore, Giuliani did not appear prepared to disclose his financial records fully and accurately, a fundamental requirement in bankruptcy proceedings. His actions, such as funneling earnings through “alter-ego” companies and making random cash withdrawals, have drawn the ire of his creditors.
Freeman and Moss plan to file a petition to declare the $148 million debt non-dischargeable, asserting it as an intentional tort. This follows their success in causing multiple extensions to the deadline due to Giuliani’s failure to provide timely financial disclosures. Moreover, the creditors’ committee recently moved to appoint a Chapter 11 Trustee, citing Giuliani’s non-compliance with disclosure requirements and his failure to protect estate assets.
In response, Giuliani attempted to convert his bankruptcy to a Chapter 7 liquidation, which would eliminate the need for a trustee and dissolve the committee. However, this move was met with fierce opposition. Creditors argued in an objection that the court should reject Giuliani’s petition, forcing him to remain under Chapter 11’s stricter oversight.
Separately, Freeman and Moss also filed an objection, supporting the dismissal of the case outright, arguing that Giuliani should not benefit from the Bankruptcy Code protections solely to evade their judgment.
Judge Sean Lane is set to hear Giuliani’s conversion petition at 11 am tomorrow. The legal community waits with bated breath to see whether the court will uphold the creditors’ demands and deny Giuliani’s attempt to pivot his bankruptcy strategy. More details on the case can be found on the bankruptcy docket.