Rudy Giuliani interrupts his own bankruptcy hearing, yelling it's 'defamatory' to accuse him of bankruptcy fraud

Giuliani, recently disbarred, erupted during his bankruptcy hearing — but he may actually score a legal win.

• Rudy Giuliani interrupted his bankruptcy hearing after an attorney said he would commit fraud.
• He is $152 million in debt, almost all of which is owed to election workers he defamed.
• Giuliani scored a legal win as the bankruptcy judge said he'd likely dismiss the case, allowing appeals.

Rudy Giuliani erupted during a bankruptcy hearing Wednesday morning, interrupting the proceedings to complain it was "defamatory" to suggest he would commit bankruptcy crimes by hiding his assets.

His interruption came as Rachel Strickland, an attorney representing two Georgia election workers whom Giuliani defamed and owes $148 million, urged the judge to dismiss the bankruptcy case and allow the claims against Giuliani to play out in different courts.

Keeping the case in bankruptcy court would inevitably lead to Giuliani hiding his assets and being charged with bankruptcy crimes, Strickland said.

"We will all be stayed while the trustee in this court wades through the morass of sexual assault and other allegations while Mr. Giuliani continues to play golf," Strickland said, her voice scathing.

Giuliani's attorneys appeared in person in Manhattan's bankruptcy court for the hearing, but Giuliani himself called in by phone.

"Ted! Would you get them on the phone and stop—" Giuliani shouted, appearing to refer to his spokesperson Ted Goodman.

"Alright, someone's got a live microphone, and that's not a good situation," the bankruptcy judge said.

As muffled noises continued to emerge from Giuliani's phone line, the judge, Sean H. Lane, tried to silence it.

"We keep having that same telephone pop up," Lane said. "Let me ask in court if we can make sure to have that muted, please."

"Your honor, this is the Rudolph Giuliani," Giuliani said amid the static of his phone. He asked for a break to talk to his lawyers and address Strickland's "defamatory remarks."

Lane asked Giuliani to wait his turn to speak. Later in the hearing, Giuliani's attorney Gary Fischoff assured the court that his client would not commit bankruptcy fraud.

"I just wanted to state something for the record," Fischoff said. "There were some statements that the debtor would commit bankruptcy fraud. So I just wanted to state for the record that Mr. Giuliani, the debtor, would not commit any bankruptcy fraud."

The judge said he'll probably dismiss Giuliani's bankruptcy case

Wednesday's bankruptcy hearing comes at a major turning point for Giuliani's bankruptcy process — where he may actually score a major legal win.

Giuliani filed for Chapter 11 bankruptcy in December, shortly after a jury in Washington, DC, found him liable for $148 million in damages for defaming Ruby Freeman and Wandrea Moss, the two election workers who he falsely claimed manipulated ballots in the 2020 election.

The bankruptcy filing paused their lawyers from enforcing the judgment against them, which formed nearly all of his $152 million in debt.

It also paused all the other civil cases against Giuliani, including a sexual abuse lawsuit from Noelle Dunphy and another defamation lawsuit from the election technology company Dominion Voting Systems.

Over the past seven months, Giuliani has tried to buy time with motions to slow down the bankruptcy process as he appeals the $148 million judgment.

At the same time, creditors have accused Giuliani of filing misleading and incomplete financial statements, and of hiding streams of income.

They asked Lane to appoint a Chapter 11 trustee, who would have the power to seize legal control of his assets and sell them to satisfy everyone who was owed money. The trustee also may be able to waive attorney-client privilege on Giuliani's behalf, possibly opening him up to further legal risk.

But in court filings this week, lawyers for Giuliani, Freeman, and Moss all agreed that dismissing the bankruptcy case entirely would be the best course of action.

They said Giuliani would agree not to file for bankruptcy again for another year, giving time for appeals in the $148 million defamation judgment to play out.

"It is in the interest of creditors for their claims to be heard in the forum of their choosing" and not bankruptcy court, Strickland said in Wednesday's hearing.

Lane said he was inclined to agree and dismiss the bankruptcy, citing "the difficulties we've had in terms of transparency in this case."

"That's not going to magically change if you continue the case in 11 with the trustee," Lane said.

The judge said that a Chapter 11 trustee could easily liquidate Giuliani's two apartments and jewelry, which comprise the bulk of his estimated $8 million estate.

But liquidating Giuliani's other assets, like his media company and coffee operation, would be difficult to disentangle from the former New York City mayor's personal brand, he said. Dealing with those could incur expenses that would ultimately come out of the pockets of creditors who were owed money, the judge said.

Philip Dublin, an attorney representing the other creditors in the bankruptcy — including Dunphy and Dominion — objected to that plan.

He said the best way to fairly split Giuliani's assets would be to appoint a Chapter 11 trustee who would liquidate Giuliani's assets.

But Strickland said her clients had priority — and they wanted the case dismissed.

"We are the significant focus of the case," she said. "We are $148 million."

The judge said he would issue an order by Friday and asked the parties to meet and figure out how to pay expenses for a discovery vendor, a third-party company that has already done months of work obtaining and organizing Giuliani's records for the case.

Lane also said he would not approve Giuliani's preferred backup plan of converting the bankruptcy process from Chapter 11 to Chapter 7, which would allow him to save future income for himself while liquidating his current assets.

Justin Kelton, an attorney representing Dunphy, told Business Insider that she would continue to pursue her sexual abuse claims in court if the judge dismissed the bankruptcy case.

"Our client Noelle Dunphy remains as strong and steadfast as ever in her commitment to pursuing justice," he said. "If Mr. Giuliani's bankruptcy is dismissed, she will continue pursuing her claims in court, and we look forward to the day when we can present this case to a jury."

Giuliani has brought upon himself a barrage of indignities as he falsely insisted that the 2020 election results were rigged.

In addition to his numerous civil cases, the former US attorney and personal lawyer to Donald Trump was disbarred in New York and is on the verge of losing his law license in Washington, DC.

He was also indicted in two criminal cases, in Georgia and Arizona, over his efforts to overturn the results of the 2020 election in those states.