A judge has rejected Rudy Giuliani’s bankruptcy petition. Here’s what that means

Former New York City Mayor Rudy Giuliani leaves U.S. District Court after being ordered to pay $148 million in his defamation lawsuit in Washington, DC, December 15, 2023. File photo by Bonnie Cash/Reuters

NEW YORK (AP) — A federal judge on Friday rejected former New York Mayor Rudy Giuliani’s bankruptcy petition, citing repeated “uncooperative behavior” that included failing to comply with court orders and failing to disclose sources of income.

While Giuliani’s creditors can now pursue other legal remedies, such as seizing his apartments and other assets, the judge’s ruling also allows the former prosecutor and longtime ally of former President Donald Trump to now attempt to appeal a massive $148 million defamation verdict.

Here are some details of the bankruptcy case:

What was the judge’s reasoning for dismissing the case?

U.S. Bankruptcy Judge Sean Lane sharply criticized Giuliani, calling him a “recalcitrant debtor” who thumbed his nose at the bankruptcy process to protect himself from the defamation judgment and other debts.

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“Transparency about Mr. Giuliani’s finances has proven to be an elusive goal,” Lane wrote in his decision, adding that he “sees no evidence that this will change.”

Lane raised concerns that Giuliani funneled his income into companies he owned and never reported any income from those entities. He also failed to disclose that he offered his own brand, “Rudy’s Coffee,” and did not immediately disclose a publishing deal.

Did Guiliani want this to happen?

Not at first. Giuliani filed for bankruptcy last December, days after a jury returned a dramatic verdict against two former Georgia election workers who said he spread lies about them in 2020 and upended their lives with racist threats and harassment. The bankruptcy filing froze collections on that debt.

Giuliani’s lawyers tried this month to have his assets sold by a receiver, but they changed their minds and asked Wednesday for the case to be dismissed. Giuliani’s spokesman said he expected the former U.S. attorney would ultimately be “fully exonerated” in court.

What happens next?

Now that the case has been dismissed, Giuliani is no longer protected from creditors, including judgments, collection actions, foreclosures and repossessions, due to an automatic stay granted under federal bankruptcy law. That means his creditors can try to recover at least some of the money he owes through various means, such as getting a court order to seize his assets.

It also means the two election workers can return to court and seek enforcement of their judgment. Their lead bankruptcy attorney said in a statement Friday that they plan to “move as quickly as possible.” Giuliani is now free to appeal the defamation verdict.

What is the current state of Giuliani’s finances?

When Giuliani filed for bankruptcy, he reported nearly $153 million in existing or potential debts. That included nearly $1 million in federal and state taxes, money he owed to lawyers, and millions more in potential judgments in lawsuits against him. He estimated at the time that he had assets worth between $1 million and $10 million.

In his latest financial filing in the bankruptcy proceedings, he said he had about $94,000 in cash at the end of May and that his company, Guiliani Communications, had about $237,000 in the bank. He has been dipping into a retirement account, which is worth nearly $2.5 million in 2022. He had just over $1 million in May.

LEFT:
Former New York City Mayor Rudy Giuliani leaves U.S. District Court after being ordered to pay $148 million in his defamation lawsuit in Washington, DC, December 15, 2023. File photo by Bonnie Cash/Reuters