Rudy Giuliani’s Chapter 11 Bankruptcy Explained
The former mayor of New York City, Rudy Giuliani, continues to battle with creditors in his Chapter 11 bankruptcy. While it is common in Chapter 7 bankruptcy cases to have bankruptcy trustees appointed, it’s rare in Chapter 11, but that would be the next step if these issues persist.
WASHINGTON, DC – DECEMBER 15: Rudy Giuliani, the former personal lawyer for former U.S. President Donald Trump, speaks with reporters outside of the E. Barrett Prettyman U.S. District Courthouse after a verdict was reached in his defamation jury trial on December 15, 2023 in Washington, DC. A jury has ordered Giuliani to pay $148 million in damages to Fulton County election workers Ruby Freeman and Shaye Moss. (Photo by Anna Moneymaker/Getty Images)
Rudy Giuliani Filed for Chapter 11 Bankruptcy
Giuliani filed for Chapter 11 bankruptcy because of a $148 million defamation lawsuit. The lawsuit by Georgia election poll workers, Ruby Freeman and Shaye Moss, was because Giuliani kept spreading lies about them being involved in election fraud. He even accused them of passing around USB drives like vials of cocaine. In actuality, they were passing mints to each other.
Sadly, in my YouTube video from a couple of days ago regarding conspiracy theorist Alex Jones from Infowars, I discussed in part the effect those lies have had on the families of the Sandy Hook Shooting.
The Georgia poll workers, mother and daughter, testified in the January 6 Committee hearings about the effect this has had on them. It truly bothers me how these people lie at the expense of others just for their gain. You would think that after more than fifty lawsuits filed nationwide that were all dismissed, it would be a sign that maybe there wasn’t sufficient evidence to back up those claims.
But I believe in a “hit them where it hurts” approach. While the First Amendment protects speech, defamation of character is a separate issue, which is why Alex Jones is in bankruptcy (lawsuit from the families of the victims of the Sandy Hook School Shooting) and now Giuliani. Jones initially filed for Chapter 11 but is now seeking to convert his bankruptcy to Chapter 7.
Rudy Giuliani’s Issues with Creditors
Since Giuliani filed for Chapter 11 bankruptcy, there have been multiple issues, such as accusations of hiding assets and failing to disclose a coffee deal. Yes, you read that correctly. Guiliani is hawking coffee for a company in Miami that is also in bankruptcy. You can’t make this up.
Another issue Giuliani faced is proving his residency. Since Florida provides unlimited homestead exemption, Giuliani claims to reside in Palm Beach to protect his $3 million plus condo from creditors.
Creditors have argued that Guiliani spends less than one-quarter of his time in the Palm Beach condo.
Not all Debts Are Dischargeable in Bankruptcy
There is the belief that all debts can be eliminated in bankruptcy, but that is not true. Domestic obligations, alimony, and child support are one category of debt that cannot be wiped out.
Another category is for willful and malicious acts. I discussed that issue in the case of rapper G-Herbo. It’s also the issue Alex Jones faces and why he seeks to convert to Chapter 7 bankruptcy. Giuliani is in the same position.
The Bankruptcy Trustee
A bankruptcy trustee is automatically appointed in your typical Chapter 7 or Chapter 13 bankruptcy case. The trustee’s role is to protect the bankruptcy estate on behalf of creditors.
For Chapter 11 bankruptcy, a creditor’s committee oversees the bankruptcy case instead of a trustee, ensuring that unsecured creditors get their fair share. Remember, creditors are already protected with secured debts because there is an asset they can take back.
However, Giuliani’s creditors now filed a motion requesting the bankruptcy judge to appoint a trustee.
Guliani’s case will be immediately affected if the bankruptcy judge appoints a trustee. This means the bankruptcy trustee could investigate the accusations against Giuliani and take action, such as forcing the sale of nonexempt assets. The bankruptcy trustee also has the authority to do a deep dive into Giuliani’s finances.
What Happens Next in Guilianis’ Bankruptcy Case
The bankruptcy judge has expressed concerns about how slow Giuliani’s case has been moving. Considering the seriousness of the accusations against Giuliani, especially about funneling income and assets to multiple companies, including questionable expenses, chances are a trustee will be appointed.
Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon books. To access my YouTube channel, click this link.
Need to look for prior blog posts or other categories? Click the links below: