Former Mayor of New York City Rudy Giuliani (AP Photo/Jose Luis Magana, File)
One day after he was disbarred in the Empire State for numerous “intentionally made false statements” blaming Donald Trump’s 2020 election defeat on widespread fraud, Rudy Giuliani and his attorneys told a bankruptcy judge the former NYC mayor has an “absolute right” to convert his Chapter 11 reorganization case into a Chapter 7 liquidation of his assets. Unsurprisingly, attorneys for Giuliani’s creditors did not agree and suggested the timing of the maneuver was no coincidence.
U.S. Bankruptcy Judge Sean Lane began the brief status conference on Wednesday by saying he “couldn’t help but notice” that Giuliani on Monday filed and personally signed an application to convert the bankruptcy from Chapter 11 to Chapter 7, a move which, if granted, would lead the U.S. Trustee’s Office to appoint a trustee that would liquidate Giuliani’s assets — for instance, his New York and Florida properties — and pay his creditors.
The judge, remarking that “inefficiency is expensive and doesn’t help anyone,” and that the same applies to “confusion,” held the status conference to figure out the best way to handle a slew of pending motions in the case in the weeks to come.
Giuliani attorney Gary Fischoff kicked off the status conference by saying the conversion application “speaks for itself,” and he defended his client’s “absolute right” to make the move under bankruptcy law.
Philip Dublin, an attorney for the Official Committee of Unsecured Creditors, representing defamed Georgia election worker Shaye Moss, Dominion Voting Systems, and Giuliani sexual assault accuser Noelle Dunphy, immediately countered Fischoff by saying the attorney was “jumping the gun a little bit.”
“We don’t believe that this debtor has an absolute right to convert the case,” Dublin said, alleging that “he [Giuliani] has misbehaved” every step of the way and is not a “good faith debtor.”
“I do not expect the committee will acquiesce to the application” to convert the case to Chapter 7, Dublin said, instead forecasting a move to dismiss the bankruptcy case.
While acknowledging that he doesn’t know Giuliani’s “true motivation,” Dublin speculated that the debtor is “trying to game the system” to potentially “disband the committee,” which as recently as June 28 filed a sprawling motion to compel discovery with threats of contempt and sanctions.
Dublin also wondered if Giuliani is trying to “get access to revenue that he generates” through his “alter ego” businesses, like Giuliani Communications, LLC.
“A Chapter 7 trustee would take control of his ‘alter ego LLC’ businesses,” Dublin said. “If he thought he’d get access to Giuliani Communications revenue he is mistaken.”
Rachel Strickland, an attorney for defamed Georgia election worker Ruby Freeman, responded in much the same vein.
For the last six months, Strickland said, “we’ve been sounding the alarm” about Giuliani’s flouting of courts orders. Recall that Freeman and her daughter Shaye Moss won their defamation case by default in December as a sanction for Giuliani’s discovery non-compliance, and a $148 million dollar judgment followed.
The attempt to convert the bankruptcy to Chapter 7, Strickland said, was “conveniently” timed considering that Giuliani now faces a motion to compel discovery.
Strickland, like Dublin, concluded that Giuliani is “banking on converting the case to sideline creditors’ probe.”
And that, Strickland said, is a “super about-face” which shows “incredible bad faith.” Why? Because Giuliani and his lawyers have staunchly opposed the appointment of a Chapter 11 trustee that creditors have demanded to take control of Giuliani’s finances and the “day-to-day operations” of his businesses.
“We are going to be asking for dismissal of these cases,” Strickland said, telling the judge that Giuliani shouldn’t be “allowed to exploit the bankruptcy any longer” with litigation delay tactics.
When it was time for the U.S. Trustee’s Office to weigh in, Andrea Schwartz said that her office has “no objection to the debtor’s motion to convert.”
“In fact, we support it,” Schwartz said, with the caveat that she will leave it to the judge to decide which path is in the best interest of creditors.
“We definitely think that a trustee should be appointed,” whether that be a Chapter 11 or Chapter 7 trustee, Schwartz added. The judge has not yet ruled on creditors’ demand for a Chapter 11 trustee.
Lane indicated that there should be briefing between now and July 10th on the Giuliani application to convert.
“We’re willing to consider the two options, conversion or dismissal, on the 10th,” Fischoff chimed in. “We’ll be ready on the 10th.”
As Law&Crime reported after Giuliani’s bankruptcy conversion motion was filed, Giuliani advisor Ted Goodman said the Chapter 7 conversion move was a way to “combat an entirely partisan and politically motivated proceeding.”
“Make no mistake, this is directly connected to the Biden regime’s ongoing efforts to take down President Trump and anyone willing to stand up against them,” Goodman said. “I can promise you this. No matter what they do, they can’t take away Mayor Giuliani’s most important assets — integrity, courage and love for America. And just like Steve Bannon and others, they’re trying to silence Mayor Giuliani. Well, good luck with that.”
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