Rudy Giuliani speaks to reporters after Republican presidential candidate former President Donald Trump spoke at a primary election night party in Nashua, N.H., Tuesday, Jan. 23, 2024. (AP Photo/Matt Rourke)
Rudy Giuliani’s creditors filed a motion on Monday to formally oppose a recent effort to convert his ongoing Chapter 11 bankruptcy reorganization proceedings into a Chapter 7 liquidation of his assets.
On July 1, Giuliani submitted the terse conversion notice with U.S. Bankruptcy Judge Sean Lane in New York’s Southern District.
On July 3, during a status conference, Lane brought up the petition. In turn, Giuliani’s attorney Gary Fischoff defended his client’s “absolute right” to make the move under bankruptcy law.
Now, in a strongly worded objection, attorneys representing a three-person “Committee of Unsecured Creditors” in the case, argued that several issues weighed against Giuliani’s request. The 33-page motion also directly contested the debtor’s claimed “absolute right.”
“The few sentences composing the entirety of the Conversion Application include the Debtor’s ‘wish’ to convert his chapter 11 case to a case under chapter 7,” the creditors’ motion reads. “Unfortunately for the Debtor, this bankruptcy case is not a Disney movie, and the Debtor’s wish is not this Court’s command. Courts in this District have definitively ruled that a debtor does not have an absolute right to convert a chapter 11 case to a case under chapter 7.”
In December 2023, defamed Georgia election workers Ruby Freeman and Wandrea ArShaye “Shaye” Moss won a $148 million default defamation verdict over a campaign against the women in which Giuliani falsely proclaimed the pair were engaged in fraud and had “cheated” voters during the 2020 presidential election.
Within a week of that judgment, Giuliani filed for bankruptcy protection. Since then, activity on the bankruptcy case docket has been frenetic, fast-paced, voluminous, and increasingly contentious.
The creditors have accused Giuliani of bad behavior like understating his assets and serial delays; Giuliani has admittedly missed several deadlines due to the demands of the case — complaining no one wants to work for him on the matter. The creditors have secured the go-ahead to perform a deep financial dive using an outside accounting firm. Giuliani, meanwhile, has sought to appeal his loss in the D.C.-based defamation case — and repeatedly failed.
All this, the creditors complain, is of a piece.
“Since day one, Giuliani has regarded this case and the bankruptcy process as a joke, hiding behind the façade of an elderly, doddering man who cannot even remember the address for his second multimillion dollar home and claims impending homelessness if he must sell that second multimillion dollar home,” the Monday motion goes on. “In reality, Giuliani has treated this Court, the bankruptcy process and the Committee the same way he treated the D.C. District Court and the Freeman Plaintiffs in the Freeman Litigation, with utter disrespect and without accountability. Giuliani is playing the delay game. He played games with the D.C. District Court in continually agreeing to comply with court orders and then failing to do so, and he has been doing the same thing in this chapter 11 case.”
The creditors pinpoint Giuliani’s filing of the conversion application as “one last thinly-veiled attempt to game the system” in response to a series of recent unfavorable court proceedings.
Among those setbacks. the creditors say, are a June 17 hearing in which Lane appeared willing to appoint a trustee due to Giuliani’s poor bookkeeping and accounting. During that hearing, the judge said “there are reasons to be very concerned here.” The creditors also note Giuliani filed his conversion application “the very next business day” after they filed a motion seeking to enforce a discovery order and move for sanctions over his previous violations of that order.
“Giuliani may have seen the writing on the wall and come to the conclusion that if he is going to be ousted as a debtor in possession, then he might as well get rid of the Committee and its investigation on his way out and, among other things, get the benefit of further delaying disclosure of his and his businesses’ financial records,” the motion goes on.
Calling the conversion request “inconsistent” and “impossible to reconcile” with recent filings, the creditors note that in late June, Giuliani filed a motion seeking additional time to get his bearings straight on the Chapter 11 plan he would submit to the court, followed by a third request seeking leave to appeal his defamation case verdict.
“These successive filings are completely incongruous and evidence the actions of a frantic debtor who knows the jig is almost up,” the creditors’ motion continues. “These recent pleadings clearly evidence an intention to exit chapter 11 after over six months of enjoying its benefits and ignoring its burdens with minimal damage to his brand and businesses and reckless disregard for his creditors.”
In response to questions about the conversion request, Giuliani adviser and spokesperson Ted Goodman said the former New York City mayor’s move amounts to “simply following available options to combat an entirely partisan and politically motivated proceeding.”
In their motion, the creditors took note of that remark:
These recent pleadings clearly evidence an intention to exit chapter 11 after over six months of enjoying its benefits and ignoring its burdens with minimal damage to his brand and businesses and reckless disregard for his creditors. And, consistent therewith, Ted Goodman, who purportedly is an employee or consultant for [Giuliani Communications, LLC ] or Giuliani himself, his title and role dependent on the day that you ask, inexplicably issued a statement on Giuliani’s abrupt change in course by calling the bankruptcy case — a case that Giuliani voluntarily commenced—“an entirely partisan and politically motivated proceeding.”
“Giuliani deliberately misrepresents his intentions to this Court as a way to stave off unfavorable rulings that could hold him accountable for his transgressions,” the motion goes on. “Such behavior cannot, and should not be rewarded by effectively absolving Giuliani of any and all responsibility to his creditors, the majority of which are litigation creditors who have been irreparably harmed by Giuliani’s malicious and intentional actions, and accountability to this Court and the bankruptcy process.”
The Official Committee of Unsecured Creditors represents defamed election worker Moss, Dominion Voting Systems, and sexual assault accuser Noelle Dunphy. Freeman, who is Moss’ mother, is represented by a separate legal team led by attorney Rachel Strickland.
The motion also takes several shots at Giuliani’s recent disbarment in the Empire State — using a bulleted list of citations that take Donald Trump’s former attorney to task for his dishonesty in promoting election-rigging conspiracy theories and other, related lies.
“Given Giuliani’s disgraceful behavior in this bankruptcy case, preceded by his disgraceful behavior in the Freeman Litigation, it comes as no surprise that Giuliani was recently disbarred in New York,” the motion reads. “The New York Supreme Court’s decision on Giuliani’s disbarment just as easily could have been written about Giuliani and this bankruptcy case. This chicanery is what he does and who he is.”
Matt Naham contributed to this report.
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