Former New York City mayor, Rudy Giuliani, is seen in a vehicle that is driving past a pro-Palestine rally at Columbia University on April 23, 2024. (Photo by Jimin Kim / SOPA Images/Sipa USA)(Sipa via AP Images)
Roughly one month after a U.S. bankruptcy judge warned Rudy Giuliani that his creditors were upset and likely to take “draconian” measures in the near future, using the words “a warning shot across the bow” to make the point clear, attorneys revealed that “frustrations are reaching a fever pitch.”
Giuliani recently asked U.S. Bankruptcy Judge Sean Lane to allow the hire of an attorney and longtime friend so the former New York City mayor could appeal the $146 million defamation judgment that Georgia election workers Ruby Freeman and Shaye Moss won by default, due to his “willful shirking of his discovery obligations.”
Giuliani’s Chapter 11 bankruptcy filing followed the defamation loss, but the lingering issue is this: the judge previously modified an automatic stay to allow Giuliani to file a notice of appeal of the Freeman judgment in the D.C. Circuit, but did not allow the pursuit of the appeal itself to move forward. Giuliani has since tried, for a second time, to modify the automatic stay, this time asking Lane to let attorney Kenneth Caruso mount the appeal in earnest, believing the judgment can be significantly or completely reduced.
On Tuesday, lawyers for the Official Committee of Unsecured Creditors and attorneys for Freeman and Moss separately filed objections to Giuliani’s request, and it’s clear that tensions are running high.
“By the Second Stay Relief Motion, the Debtor asks this Court to bless a framework where he does nothing to advance his chapter 11 case and continues with the Freeman Litigation (as defined below) in the exact manner he wishes, despite not having participated in any meaningful way for several years before the Petition Date (as defined below). With no end in sight for any potential appeal of the Freeman Judgment (as defined below), the Debtor asks his other creditors to sit on their hands while he continually delays his day of reckoning, at their expense,” the Committee lawyers began, accusing Giuliani of pretending that the appeal is “for the benefit of his other creditors.”
Instead, the lawyers said, Giuliani has been all but radio silent when it comes to talking with the Committee, refused to “even respond to ordinary course emails about the Debtor’s intent to comply with his statutory obligations or prior representations made to this Court,” and failed to file “monthly operating reports” on time — leaving “his creditors and this Court largely in the dark” about what’s going on.
“The Committee finds itself on a hamster wheel trying to hold the Debtor accountable for his recurring and continuous misdeeds,” the filing summarized, with the lawyers lamenting that the Committee had to respond a second time to an automatic stay modification request.
The lawyers described Giuliani’s latest as a “near carbon copy of the Debtor’s low-effort, woefully deficient” first go-around on the proverbial hamster wheel, which, they said, should only lead the judge to reject it.
“The Debtor is telling us that his bankruptcy case is solely a means to fight the Freeman Judgment, the automatic stay is his sword against the Freeman Plaintiffs (as defined below) and all of his creditors and the rules governing the bankruptcy process and the integrity thereof do not matter to him. The Committee hears him loud and clear and will not stand by silently,” the objection stated, further accusing Giuliani of being unserious about the bankruptcy matter and acting in bad faith.
Rejecting the notion that an appeal of the Freeman judgment would be helpful, the lawyers argued that tying up an appeal in the courts for, perhaps, years “will surely delay the Debtor’s exit from chapter 11 and that delay will drain the Debtor’s limited resources and deplete his assets available for distribution to creditors.” The attorneys evidently believe that is Giuliani’s goal:
To date, the Debtor has shown no interest in, among other obligations, (i) advancing his chapter 11 case, (ii) maximizing the value of his estate for the benefit of creditors, (iii) providing complete, accurate and timely financial disclosures, (iv) complying with the rules of the bankruptcy process or (v) engaging productively with his creditors. The playing field here should not be tilted in the Debtor’s favor. The Second Stay Relief Motion should be denied.
Attorneys for Ruby Freeman and her daughter Shaye Moss submitted a filing of their own opposing a modification of the automatic stay, writing that Giuliani’s conduct in the bankruptcy case is a continuation of his conduct in the defamation case.
“Given Mr. Giuliani’s established track record of intentionally abusing the civil justice system, it is unsurprising that he continues to do so in bankruptcy,” their objection said. “To date, he has not meaningfully advanced this case in the over four months since its commencement. Far from making progress towards a successful reorganization, Mr. Giuliani has thumbed his nose at even the most basic reporting requirements such as filing complete, accurate and timely monthly operating reports. Put simply, Mr. Giuliani is trying to capture the benefits of the chapter 11 process while ignoring his obligations.”
From here, the filing made a direct reference to Lane’s “shot across the bow” warnings to Giuliani and confirmed that creditors have, in fact, had enough, and that “frustrations are reaching a fever pitch.”
“As this Court is well aware, Mr. Giuliani’s creditors have lost their patience. What minimal evidence creditors have suggests Mr. Giuliani is funding his affluent lifestyle off of their backs. And now, just as creditor frustrations are reaching a fever pitch, Mr. Giuliani has filed his Motion seeking special permission to pursue an appeal of the Freeman Judgment,” the documents said. “Much like the first episode when the parties litigated this issue, all of Mr. Giuliani’s creditors uniformly oppose his requested relief. The reasons why are the same now as they were then: (a) the Motion is facially insufficient, (b) the relief sought is impermissible as a matter of law, and (c) granting the Motion will stall progress in this chapter 11 case.”
Giuliani, for his part on Tuesday, filed a response to creditors’ lawyers, explaining that recent failures to produce “monthly operating reports” had more than something to do with his accountant quitting and no one else being “interested” in filling that role.
“Unfortunately, the Debtor originally had an accountant who was helping, however, he had a change of heart and indicated that he no longer wished to help prepare the monthly operating reports,” attorney Heath Berger said. “The Debtor advised that he has reached out to a number of accounting firms and CPA’s seeking their help, however, no one seems interested in taking the assignment.”
Describing Giuliani’s reports as “fairly straight forward,” Berger said that his client’s “sole source of income is mainly from his social security and whatever little bit of money comes in from his radio show and podcast.”
Notably, Freeman and Moss’ lawyers reiterated that allowing Giuliani to appeal was not a reasonable path towards protecting his business interests, precisely because that “political commentary” could prove more costly than lucrative.
“Moreover, pursuing the appeal is in no way essential to protecting Mr. Giuliani’s business, which—to the extent it exists—is based on his own political commentary,” the filing said, before adding a footnote: “As a result of his defamatory statements, Mr. Giuliani’s continued business is arguably creating liabilities that could exceed any profit.”
Before Giuliani was granted a reprieve by not being immediately ordered to sell his million-dollar Florida condo in March, he had argued that he needed the property to podcast from there and make money off of his internet commentary to pay his creditors.
Freeman and Moss, in the opening lines of their objection, said that Giuliani used his platform as recently as April 11 to repeat the defamatory statements he was held liable for, namely that they played a role trying to steal the election from Donald Trump:
On April 11, 2024, after filing this case, and after being warned by this Court not to continue making defamatory statements, Rudy Giuliani livestreamed a video of himself addressing a crowd in Tulsa, Oklahoma, across multiple platforms, including Twitter/X, YouTube, and Rumble. While sitting in a chair onstage, Mr. Giuliani discusses election night 2020 and Georgia election workers Ruby Freeman and Shaye Moss. Despite having been found liable for approximately $148 million in damages as a result of his previous statements about these women, Mr. Giuliani again made false and defamatory remarks about them. Mr. Giuliani stated “I was sued by two women who were counting multiple ballots in Georgia, we have one of them on tape doing it.” Mr. Giuliani went on and told the crowd, “I can show you [evidence] tonight of them counting the ballots four times, one two one two four times four time four times.”
Read the Freeman objection here and the Committee lawyers’ filing here.
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