Former Mayor of New York Rudy Giuliani speaks to reporters as he leaves his apartment building in New York, Wednesday, Aug. 23, 2023. (AP Photo/Seth Wenig)
After a judge ordered the dismissal last Friday of Rudy Giuliani’s bankruptcy case, attorneys for the former NYC mayor are still working through some particulars on how exactly to pay the potentially hefty professional fees owed to the forensic financial investigator hired by his creditors.
While creditors have estimated an eye-popping $350,000 in fees, proposing emptying Giuliani’s bank accounts, putting those funds in escrow, and having him pay the difference following the sale of his Upper East Side apartment, Giuliani is counter proposing that the financial advisory firm simply place a lien on the property and be paid at closing.
In April, U.S. Bankruptcy Judge Sean Lane allowed the Official Committee of Unsecured Creditors, representing defamed Georgia election worker Shaye Moss, Dominion Voting Systems, and Giuliani sexual assault accuser Noelle Dunphy, to hire Global Data Risk to probe Giuliani’s “income, assets and liabilities,” “expenses and budgets,” his companies, properties, and more in its capacity as a “specialized forensic financial advisor.”
Two months later, the judge permitted Giuliani to hire Sotheby’s International Realty to put his multimillion-dollar NYC apartment up for sale, writing that he was “satisfied” that the broker was well-qualified to sell the residence and that the move was a “sound exercise of business judgment” on Giuliani’s part.
Since that time, Giuliani resisted the appointment of a Chapter 11 trustee that creditors sought to oversee and control his finances and businesses, tried and failed to launch in earnest an appeal of the $148 million defamation judgment in the Freeman case that preceded his bankruptcy filing, suddenly shifted strategy to convert his Chapter 11 reorganization case into a Chapter 7 of his assets, and finally consented to the dismissal of his bankruptcy case just before a hearing where he shouted out of turn on a Zoom call.
That hearing ended with Lane revealing his intent to dismiss the case, but before that an attorney for creditors pointed out that the judge needed to make sure there would be “an appropriate reserve of funds” in escrow to pay Global Data Risk.
Giuliani’s attorney Gary Fischoff stated he was “aghast” that creditors estimated the professional fees owed at $400,000, but the judge said that number could be figured out “fairly quickly” later on.
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In the case dismissal order that followed days later, Lane remarked in a footnote that the debtor and creditors “disagree on whether the fees of the Committee’s financial advisors must be paid as part of any dismissal.”
“As no fee application is before the Court, it is premature for the Court to determine what fees should be paid as part of dismissal,” the judge said. “All parties reserve their rights on this issue, which can be addressed after the proposed order and any responses are filed on the docket.”
Dueling proposed orders hit the docket thereafter, with creditors pushing for Giuliani to be on the hook for Global Data Risk’s $350,000 worth of “professional fees and expenses” by first draining “all funds in his savings and checking accounts” and then paying off the remainder of the fees, whatever they end up being, through the sale of the NYC apartment.
The proposal involved appointing committee lawyer Philip Dublin as a “limited purpose trustee” who would “facilitate and control the monetization” of apartment sale funds and force Giuliani to “cooperate in all respects with respect to the sale,” including handing the trustee “all access, information, documents and records related to the NYC Apartment.”
Fischoff countered Monday that attorneys for creditors have gone too far.
“The terms of the proposed order are onerous, punitive, and overreaching,” he wrote. “The creditors want it both ways, they want the case dismissed while they also exercise complete control over the Debtor.”
Fischoff proposed instead that Global Data Risk place a lien on the apartment to “ensure they are paid the fees awarded by the court,” after the judge sets a hearing to determine the amount of money owed to the forensic investigator.
“The award shall be secured by a lien on the the shares owned by the Debtor representing his ownership interest in the cooperative apartment,” the filing said. “Upon the sale of the apartment, Global Data Risk, LLC shall be paid at the closing from the sale proceeds.”
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