Former Mayor of New York Rudy Giuliani talks to reporters as he leaves after his defamation trial in Washington, on Friday, Dec. 15, 2023. (AP Photo/Jose Luis Magana, File)
Rudy Giuliani’s accountant recently quit, and no one else will provide him with similar services, a new bankruptcy filing says, suggesting he is now personally filing mandatory operating reports in his bankruptcy case — explaining why some reports were several weeks late.
In late April, attorney Gary Fischoff asked U.S. Bankruptcy Judge Sean Lane to modify a stay previously issued in February and allow Giuliani to appeal the $148 million defamation verdict won by former Georgia election workers Ruby Freeman and Wandrea’ “Shaye” Moss.
A group of Giuliani’s creditors opposed the stay in an early Tuesday filing by citing, among various other alleged bad behavior, delinquent financial reports for February and March — which were filed 42 days and 15 days after their respective deadlines.
“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,” Giuliani’s attorney Heath Berger explained in a late Tuesday response. “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.”
To hear Giuliani tell it, the appeal itself will be instrumental to the underlying bankruptcy case and his potential victory against Freeman and Moss “can only assist and not prejudice other creditors” because if he avoids paying the election workers, or reduces the amount he owes “there will be more funds available” to “satisfy” other creditors.
The Official Committee of Unsecured Creditors says that argument is bunk.
“[H]e pretends the pursuit of an appeal of the Freeman Judgment is for the benefit of his other creditors; yet, in recent weeks, he and his counsel have had virtually no communication with the Committee,” the creditors’ filing reads. “Debtor continues wasting resources funding and living in two multimillion dollar residences, proposes extended deadlines for himself in the chapter 11 case, misses those same extended deadlines, consistently fails to file timely monthly operating reports and leaves his creditors and this Court largely in the dark.”
The motion argues that Giuliani is not serious about helping his other creditors because he has not responded to multiple emails regarding “statutory obligations or prior representations made” in court — specifically as to when his New York City apartment will be up for sale.
And, the creditors say, this is all a retread of past dilatory shenanigans.
“The Committee finds itself on a hamster wheel trying to hold the Debtor accountable for his recurring and continuous misdeeds,” the motion goes on. “Indeed, this is the second time the parties have been through this very exercise. The Second Stay Relief Motion is a near carbon copy of the Debtor’s low-effort, woefully deficient First Stay Relief Motion.”
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Rather than an attempt to pay his creditors not named Freeman and Moss, the motion argues, Giuliani’s effort to move forward with his appeal is an effort to “abuse the bankruptcy process and reap all the benefits thereof while ignoring his related obligations as a debtor.”
A footnote in the creditors’ motion points to some potential red flags while the process plays out, saying the belatedly filed reports and on-time reports alike “raise more questions and issues, including with respect to the continued payment of expenses of third parties such as his affiliated businesses, daily Amazon and Apple charges and the $12,000 unauthorized payment to his accountant.”
The creditors suggest a classic midtown Manhattan shell game is being played by the man formerly known as hizzoner.
“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 and all of his creditors and the rules governing the bankruptcy process and the integrity thereof do not matter to him,” the filing continues. “The Committee hears him loud and clear and will not stand by silently. If the Debtor had any serious, good faith intentions for his bankruptcy case and a reorganization, then he would talk to the Committee and his creditors. He would provide complete, accurate and timely financial disclosures. He would not waste everyone’s time repeatedly filing the same self-serving and inadequate pleadings.”
In other words, the creditors are accusing Giuliani of playing each case off one another while committing to a series of procedural delays in each case — which, combined, are allowing him to continue to spend money in a freewheeling manner and dodge his debts ad infinitum.
The unsecured creditors suggest the request for an automatic stay was news to them — despite Lane previously telling all the parties to avoid “surprise” with issues related to the defamation verdict appeal.
“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 in the exact manner he wishes, despite not having participated in any meaningful way for several years,” the motion reads. “With no end in sight for any potential appeal of the Freeman Judgment, the Debtor asks his other creditors to sit on their hands while he continually delays his day of reckoning, at their expense.”
Freeman and Moss also opposed parts of Giuliani’s stay request in their own Tuesday motion while asking the court to rule on the merits of the issue because the debtor will otherwise use the lingering prospect of an appeal as “the basis for continued delay in this case.”
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