A New York judge dismissed Rudy Giuliani’s bankruptcy case on Friday, clearing the way for two Georgia election workers to try to recover nearly $150m Giuliani was ordered to pay them for defaming them after the 2020 election.
“The court finds that cause exists to convert or dismiss the case. The record in this case reflects Mr Giuliani’s continued failure to meet his reporting obligations and provide the financial transparency required of a debtor in possession,” US bankruptcy judge Sean Lane wrote in his ruling. Lane also barred Giuliani from filing for bankruptcy again within one year.
The decision comes after lawyers for the two women, Ruby Freeman and her daughter Shaye Moss, as well as other creditors accused Giuliani of concealing information about his finances.
“Since day one, Giuliani has regarded this case and the bankruptcy process as a joke, hiding behind the facade 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,” lawyers for creditors wrote in a filing earlier this month.
Giuliani had initially asked a judge to convert the case from chapter 11 bankruptcy – a type of bankruptcy that allows a debtor to reorganize their assets – to a chapter 7, which would allow him to liquidate his assets. He abruptly reversed course and requested that Lane dismiss the bankruptcy altogether.
In addition to retaining control of his finances, dismissal also means that Giuliani can pursue an appeal of the judgment awarded to Freeman and Moss.
“We’re pleased the court saw through Mr Giuliani’s games and put a stop to his abuse of the bankruptcy proceeding. We will move forward as quickly as possible to begin enforcing our judgment against him,” Rachel Strickland, a lawyer representing Freeman and Moss, said in a statement.
While Freeman and Moss requested the case be dismissed, a lawyer representing all creditors in the case favored instead appointing a trustee to take control of Giuliani’s finances. If the bankruptcy case were to continue with a trustee, Lane noted in his ruling, the claims of all creditors would be treated equally. Dismissing the case allows Freeman and Moss to pursue their claim faster.
Lane chose dismissal, writing that continuing the bankruptcy case with a trustee could allow Giuliani to delay things further and accumulate additional expenses that could cut into his ability to pay creditors.
“There is little reason to conclude that the Mr Giuliani’s uncooperative conduct will change after the appointment of a chapter 11 trustee,” he wrote.
At another point in his ruling, Lane said Giuliani had engaged in “self-dealing” and that his business practices were “concerning”.
Giuliani lied repeatedly about Freeman and Moss after the 2020 election, promoting false claims that they had been involved in a scheme to steal the election in Georgia. During a trial in Washington DC in December, both women – who have spoken little publicly – detailed the severe harassment they faced and the fear they continue to feel when they go out in public.
Freeman and Moss also have a pending defamation case against The Gateway Pundit, a far-right news outlet that played a critical role in spreading false claims and targeting them. The outlet has also declared bankruptcy to delay the case, and Freeman and Moss have asked a judge to dismiss it.
The defamation cases – and related bankruptcy proceedings – are being closely watched because they are a test of whether libel law in the United States can be used as an effective tool to punish and deter those who knowingly spread false information. The bankruptcy cases are largely seen as a tool to avoid paying judgments and full accountability.