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Rudy Giuliani’s bankruptcy hearing devolved into chaos when the former New York City mayor interrupted the court after a lawyer for his creditors said she would consider seeking prison time for his alleged “bankruptcy crimes.”
At the hearing on Wednesday morning, Rachel Strickland, lawyer for the two election workers who Giuliani defamed and now owes $148m, argued in favor of dismissing the Chapter 11 bankruptcy case.
She said that she feared Giuliani would get a “hall pass” if the case was not dismissed, citing his pattern of filing late and inaccurate financial reports.
Strickland then suggested that Giuliani had committed “bankruptcy crimes”, and that she would seek jail time, not financial repercussions.
Giuliani, who was on the call, interjected, yelling: “Would someone get them on the phone?”
The judge then asked for Giuliani’s microphone to be muted.
“Your honor, this is Rudolph Giuliani,” he told the judge, adding that Strickland’s comments were “highly defamatory, your honor.”
Giuliani said he wanted a break but the judge said he would have to wait until after Strickland finished her presentation.
“Sir, everybody gets a chance to be heard but you cannot interrupt someone else while they’re being heard,” the judge said, before threatening to “cut his line off” if he didn’t stop talking.
Later in the hearing, Giuliani’s lawyer Gary Fischoff told the court: “There were some statements that the debtor was going to commit bankruptcy crimes…Giuliani would not be committing any bankruptcy crimes.”
Strickland filed a motion on July 8 in favor of the dismissal of the case.
Although Giuliani had initially requested to convert the case from a Chapter 11, which would see his assets reorganized, to a Chapter 7, which would see his assets liquidated.
However, he changed his tune less than an hour before Wednesday’s hearing: Giuliani’s legal team signalled support for the dismissal plan. Fischoff argued at the hearing that a dismissal was the best option for his client.
“The best chance of getting an appellate determination would be a dismissal,” Fischoff said, referring to his appeal of the $148m judgment against Giuliani.
Although the election workers already have a judgment, other creditors’ cases are ongoing. Fischoff said a dismissal means those other creditors would be “free to pursue” their cases in court, since a dismissal would lift the stay on the ongoing cases against Giuliani.
However, Phil Dublin, a lawyer for the creditors’ committee, said his clients prefer to appoint a Chapter 11 trustee rather than dismissing the case, arguing that the appointment of a trustee would result in the “most equitable outcome” for the creditors.
Dublin said keeping it as a Chapter 11 case would permit investigations into Giuliani’s finances, including the alleged unpaid $2 million in legal fees owed by Donald Trump, the Trump campaign or the Republican National Committee.
The former mayor’s assets would still be available to creditors, Giuliani’s lawyer argued. His only income is social service payments, Fischoff said, adding that he’s “an 80-year-old disbarred attorney who may choose to discontinue working” should a Chapter 11 trustee be appointed.
Strickland pounced on his own lawyer’s admission. “We all suspect that if a trustee is appointed, Giuliani is going to sit on his butt,” she said.
The lawyer added that if the former mayor is working for himself, “I suspect he will be hustling for Rudy Coffee and all the rest of his money-making endeavors” and funneling cash to all of the businesses that he claims are out of the reach of creditors.
Giuliani “regards this court as a pause button on his woes” while he continues to live his life, she said.
The judge said he hopes to make a ruling on the matter before the end of the week but revealed that he is “leaning toward dismissal.”
“I’m concerned that what’s past is prologue…and that issues about transparency will continue,” the judge explained.
The creditors’ committee has complained in filings about the lack of transparency into his finances. The committee has taken issue with Giulani’s “deficiencies in his financial reporting and disclosures,” like discrepencies related to payments on his Florida condo; his “unauthorized payments” to his alleged “girlfriend”; and his failure to comply with discovery requests.
Because he did not comply with the requests, the committee asked on June 28 that the court hold Giuliani in contempt and impose sanctions. In a July 8 filing, the committee’s lawyers accused him of treating “the bankruptcy process as a joke, hiding behind the façade of an elderly, doddering man.”
