The Adversary Process and the Fall of Rudy Giuliani’s Chapter 11 Bankruptcy

Rudy Giuliani, once celebrated as “America’s Mayor,” famously filed for Chapter 11 bankruptcy in late 2023 following a staggering $148 million defamation judgment. The plaintiffs, Ruby Freeman and Wandrea’ “Shaye” Moss, two former Georgia election workers, became the primary creditors in a case that would serve as a masterclass in bankruptcy litigation and how the “adversary process” works.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Updated on January 7, 2026.

Listen: The Professor’s Audio Briefing.

What is an Adversary Proceeding?

In my classes, I often describe an adversary proceeding as a “lawsuit within a bankruptcy.” While a standard bankruptcy filing is considered administrative, maybe even procedural, an adversary proceeding can be compared to a litigated civil case. It is a separate civil action filed under Part VII of the Federal Rules of Bankruptcy Procedure to determine specific issues, most commonly, whether a particular debt is “dischargeable.”

The “Willful and Malicious” Standard

From the outset, I maintained that Giuliani would be unable to escape this debt. Under the Bankruptcy Code, debts arising from “willful and malicious injury” are non-dischargeable, which can apply in defamation cases.

However, Giuliani’s legal strategy hit a wall due to a critical stipulation that was mainly ignored or missed by mainstream media. In the final judgment of the original defamation case, language was included declaring that his conduct was “intentional, malicious, wanton, and willful.” Now, I can’t explain why his lawyers would agree to that language. I certainly wouldn’t as the results in judgment being nondischargeable. Therefore, Guiliani admitting to the very standard that prevents a debt from being discharged.

It is hereby DECLARED pursuant to 28 U.S.C. § 2201(a), as between Plaintiffs and Defendant: that Defendant’s conduct was intentional, malicious, wanton, and willful, such that Plaintiffs are entitled to punitive damages.

Giuliani’s legal team committed what I consider a fatal legal error. As I often tell my students, you cannot ask the bankruptcy court for “fresh start” equity when you have already stipulated to malice.

Why Giuliani’s Bankruptcy Case Collapsed

The adversary process, like any litigated matter, whether a criminal case, civil case, or family law case, is rigorous. It involves discovery, motions to dismiss, and evidentiary hearings. However, Giuliani never made it to a final ruling on dischargeability. Instead, the court faced a “recalcitrant debtor.”

Lack of Transparency: The court noted a consistent failure on behalf of Guiliani to disclose assets, including a “Rudy’s Coffee” brand and various memorabilia.

The Dismissal: In July 2024, U.S. Bankruptcy Judge Sean Lane dismissed the case entirely, citing Giuliani’s “uncooperative conduct.”

The Consequences: By early 2025, Giuliani was forced into a settlement to prevent the seizure of his primary residence(s), illustrating that bankruptcy protects the honest debtor, not those who ignore the rules.

Key Takeaways on the Adversary Process

The Giuliani case highlights that the adversary process is not a mere formality. It is governed by rules almost identical to the Federal Rules of Civil Procedure. For example, when a debtor is seeking a discharge from student loan debt, which uses the Brunner test, an adversary proceeding is required. The adversary proceeding is where the real legal battle happens and is comparable to trial law.

In Giuliani’s case, his failure to respect the transparency requirements of the Chapter 11 process led to the ultimate sanction for his bankruptcy case: dismissal with a ban on refiling.

Educational Resources

• For Institutions: Colleges and universities can purchase or request examination copies of my textbook directly from Routledge Publishing.
• For Students & Practitioners: Single print and digital copies are available via Amazon Books.
• Video Lectures: Stream comprehensive legal breakdowns and video explanations on the Prof. Hernandez YouTube Channel.

Bankruptcy Court & Consumer Resources

Explore a deep dive for consumer guides and court directories to navigate your legal options:

• A step-by-step master guide on Filing for Bankruptcy and Navigating the Petition.
• Access full directories for the Federal Bankruptcy Court System and Trustee Contact Information.
• Protect your assets by reviewing your specific State Bankruptcy Exemptions or compare them against the Federal Bankruptcy Exemptions.
• Prepare for your court date with the updated brief on the 341 Meeting of Creditors Rules and Procedures.

Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.

Updated initially on November 10, 2024.