Giuliani hearing devolves into chaos as judge signals bankruptcy dismissal

by Zach Schonfeld and Ella Lee - 07/10/24 1:30 PM ET

A judge signaled he’ll dismiss Rudy Giuliani’s bankruptcy after a chaotic hearing Wednesday in which the judge at one point threatened to cut off the ex-New York City mayor’s microphone for interjecting.

Judge Sean Lane said he’d make a final ruling on the complex matter on Friday afternoon.

“I’m leaning toward dismissal, frankly, because I am concerned that the past is prologue,” Lane said.

Though Giuliani in a sudden shift consented to dismissing his bankruptcy mere minutes before the hearing began, he jumped in during the proceeding to push back against his creditors’ accusations he committed bankruptcy crimes.

After several garbled interjections, Lane paused arguments to address the “same cellphone” repeatedly butting in during arguments by a lawyer for Georgia election workers Shaye Moss and Ruby Freeman. Giuliani’s bankruptcy was precipitated by a jury’s $148 million verdict against him after he baselessly accused the women of 2020 election fraud.

“Let me ask in court if we can make sure to have that muted, please,” Lane said.

“Your honor, this is Rudolph Giuliani,” the ex-mayor explained.

Speaking over each other, Lane sought to pull Giuliani into line. But Giuliani insisted he should be allowed to push back against the election workers’ lawyer, who had just warned that the ex-mayor’s conduct throughout the bankruptcy could force the judge to “entertain putting America’s mayor in prison.”

“Highly defamatory, your honor!” Giuliani exclaimed.

“So I’m going to ask you to listen to me, and if you don’t, I’m going to have to cut you off,” the judge replied, after which Giuliani remained silent.

Giuliani’s bankruptcy has reached a crossroads after six months of increasing pressure from his creditors, who all accuse the former federal prosecutor of using bankruptcy as a delay tactic while he hides assets and spends egregiously.

The election workers want to dismiss the bankruptcy, which would unfreeze their lawsuit and enable them to begin collecting their staggering award.

The election workers’ lawyer, Rachel Strickland, raised concerns that, if the bankruptcy continues, many of Giuliani’s assets would ultimately go to administrative expenses, not the creditors.

“The beginning, middle and end of this case has been about my clients and their judgment, to highlight with a bad-faith litigation tactic,” Strickland said. “Mr. Giuliani hasn’t even pretended to comply with the duties and responsibilities as a debtor in possession. He regards this court as a pause button on his woes while he continues to live his life unbothered by creditors. The case should be dismissed.”

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Less than an hour before the hearing, Giuliani’s team agreed with the election workers’ proposal.

“I don’t think that’s to the benefit of creditors to have the assets go to pay professional fees,” Gary Fischoff, Giuliani’s attorney, said at the hearing.

But the official creditors committee wants to remain in the bankruptcy system, worried that they’d otherwise be left with nothing. They proposed appointing a bankruptcy trustee who would effectively take control of Giuliani’s assets and monitor his finances.

Other members of the creditors committee include the electronic voting machine company Dominion Voting Systems, which Giuliani in 2020 also mired in conspiracy theories, and Noelle Dunphy, a former employee of the ex-mayor who sued him alleging sexual assault, harassment and nonpayment of wages.

Phil Dublin, a lawyer representing the committee, said those other creditors shouldn’t be disadvantaged because of Giuliani’s tactics.

“Because of his immoral conduct, his failure to comply with the reporting obligations, his failure to reply with court orders, they shouldn’t have to then step back behind the Freeman plaintiffs,” said Dublin.

The Justice Department’s bankruptcy watchdog, the U.S. Trustee Program, did not take a position on the requests.

“It’s clear that there is no question that cause exists to remove this debtor, Mr. Giuliani, from possession of his assets. The only question really for today is, what is the best interest of the creditors?” attorney Andrea Schwartz said on behalf of the office.

Tags Rudy Giuliani