(Photo by Tasos Katopodis/Getty Images)
Rudy Giuliani is publicly losing two battles this week: one with gravity, and one with bankruptcy. And while he shook off a tumble at the RNC, he’s probably going to have a little harder time righting himself with US Bankruptcy Judge Sean Lane.
On July 10, Rudy tapped out of the bankruptcy he filed in December to fend off a $148 million defamation verdict in favor of Atlanta poll workers Ruby Freeman and Shaye Moss. Citing Rudy’s refusal to comply with the disclosure and reporting requirements under Chapter 11, Judge Lane refused in May to lift the automatic stay to allow him to appeal the Freeman/Moss verdict. At which point it became clear that the best Rudy could wring out of bankruptcy would be a brief delay. At worst he could get himself sanctioned to hell for failing to comply with the court’s orders and wind up with a trustee appointed to take his life apart. And so Giuliani moved on the 10th to dismiss his case entirely.
This should have been a fairly straightforward proceeding, with Giuliani emptying his pockets on the way out the door to pay the administrative expenses already accrued, and then getting everything he owns attached by Freeman and Moss in short order — it’s not like he can get a supersedeas bond for $148 million to stave off collections pending his doomed appeal. But nothing with America’s erstwhile mayor is ever straightforward, and so he’s managed to bar his own exit from the courthouse.
A week ago, Judge Lane issued a memorandum of decision finding that the case should be dismissed and ordering the parties to hammer out a proposed order within a few days. The Freeman plaintiffs suggested that the debtor hand over the cash in his accounts up to $350,000, but Rudy’s counsel whined that this was “onerous, punitive, and overreaching” and demanded instead that administrative expenses be converted to personal debts in the form of a lien on his New York condo.
At a contentious hearing on Wednesday, Judge Lane made it clear that the administrative costs needed to be dealt with now, particularly a $400,000 bill to the forensic accountant hired by the creditors committee to track down all Rudy’s assets. After the Freeman plaintiffs revealed that the only financial information they’d been able to shake loose showed the debtor spending $30,000 of the $60,000 in his checking account in the week since he’d moved for dismissal, the judge instructed Rudy’s lawyers Heath Berger and Gary Fischoff in no uncertain terms to impress upon their client that he needs to get his shit together.
“If your client persists in this course of action, which is to contest this expense, there are a lot of bad things that will happen,” the court intoned ominously.
He gave Berger and Fischoff until “high noon — an appropriately theatrical time” on Thursday to come up with a resolution.
At noon the next day, Berger docketed a letter ruefully admitting that, although the parties had been “engaged in extensive negotiations over the last 24 hours,” they had failed to resolve the matter. But, he assured the court, “The parties are still talking and I am hopeful a joint resolution will be forthcoming shortly.”
Three hours later, the Freeman plaintiffs slapped back in a letter of their own “updating the Court on his so-called ‘extensive negotiations,’”
“Much of the day has been spent with Debtor’s counsel trying to reach his client,” they wrote, flagging for the court that, “In light of the Debtor’s claims of limited access to cash and new reports of the Debtor, his assistant, and his companion flying first class this week.” They helpfully provided the link to a CNN story documenting Rudy’s trip to the RNC in Milwaukee, chaperoned by his aide Ted Goodman and his girlfriend/cohost Maria Ryan.
They add that they “requested additional disclosure from the Debtor regarding his recent expenditures” to no avail.
This afternoon, the debtor responded. But not by assuring the court that he would immediately turn over the balance of his cash in exchange for permission to be on his way.
Instead Berger wrote to “clarify some issues,” while assuring the court that his client was most definitely “engaged in good faith negotiations in trying to resolve this matter.”
“Contrary to Ms. Strickland’s allegations, the day was not spent trying to get in touch with the Debtor,” he offered. “I had been in contact all day with the Debtor which allowed me to make numerous offers to the parties in an attempt to resolve this matter.”
Surely Judge Lane will be satisfied with these assertions and no “bad things” will happen to Rudy next week.
Drink up!
In re Rudolph Giuliani [Bankruptcy Docket via Court Listener]
Liz Dye lives in Baltimore where she produces the Law and Chaos substack and podcast.