Giuliani may avoid testimony in bankruptcy case amid settlement on fees

Former New York mayor Rudy Giuliani may avoid having to testify under oath about his finances after he reached a last-minute agreement with his creditors to pay an estimated $350,000 in administrative fees tied to his bankruptcy case, paving the way for its dismissal.

Lawyers for Giuliani and several creditors, including two former Georgia election workers who won a $148 million defamation claim against the former mayor, announced in a letter sent Wednesday morning to the judge overseeing Giuliani’s bankruptcy case that they had “conferred and reached agreement” to settle fees and move forward with dismissal.

A proposed order attached to the letter stated that Giuliani agreed to transfer $100,000 to an escrow account controlled by his attorneys and satisfy the remainder of the fees with proceeds from the sale of one of his two properties — his New York apartment or his condo in Palm Beach, Fla.

The proposal says a lien will be placed on both properties “as security” to make sure Giuliani pays fees owed to Global Risk Data, an accounting firm retained by the creditors to investigate his finances, but it also says the firm cannot seek to foreclose on or take other action related to either property for six months after the judge approves the agreement.

Lawyers for Ruby Freeman and Shaye Moss, the former Georgia election workers whom Giuliani falsely accused of helping to steal the 2020 presidential election, have previously sought to gain control of those properties and are expected to file suit seeking that real estate and Giuliani’s other assets once the bankruptcy case is formally dismissed. The proposed order says if they receive proceeds from the sale of either property, they will pay what is owed to GRD.

A spokesman for Giuliani did not immediately respond to a request for comment.

The agreement must first be approved by U.S. Bankruptcy Judge Sean Lane in the Southern District of New York, who last week threatened to reverse his decision to dismiss Giuliani’s bankruptcy case after Giuliani claimed he did not “have the ability to pay” the administrative fees — which must be resolved before the case can be closed.

Lane, who has been critical of Giuliani’s lack of financial transparency throughout the proceedings, was skeptical of the former mayor’s claim that he doesn’t have the money, citing Giuliani’s ownership of two apartments that are of “considerable value.”

“What little we know about the Debtor’s financial situation makes his stance here more troubling,” Lane wrote. “Even assuming that the Debtor does not have the funds on hand to immediately pay these bankruptcy expenses, he certainly has considerable assets upon which he can draw to pay such expenses.”

Lane threatened to hold an evidentiary hearing and require Giuliani to give sworn testimony about the state of his finances. But he gave the former mayor and his creditors until noon Wednesday to submit a letter with their suggestions of how to move forward. The proposed joint agreement was filed about three hours before that deadline.

The developments come nearly three weeks after Lane threw out Giuliani’s bankruptcy case, paving the way for numerous creditors, including Freeman and Moss, to pursue and potentially seize his assets.

But within days of that order, a dispute emerged over fees incurred by GRD, an investigative accounting firm made up of former CIA and FBI officials hired by the creditors to probe Giuliani’s finances. The firm was retained after Giuliani repeatedly failed to fully disclose his cash and assets, including information about his businesses and other holdings that is required in bankruptcy proceedings — a lack of transparency the judge called “troubling.”

Rachel Strickland, an attorney for Freeman and Moss, pressed Lane to order Giuliani to turn over all the cash in his bank account and control of his New York apartment to satisfy court fees — a request the judge called “premature.” But in a July 17 hearing, Strickland urged the judge to take action quickly, accusing Giuliani of financial “shenanigans” and continuing to spend freely without authorization from the court.

Strickland said records from the only bank account Giuliani disclosed to creditors showed that he had burned through more than half of the $60,000 in the account after Lane agreed to dismiss the bankruptcy case — including $39,000 in fees related to his Florida condo and New York apartment. Giuliani also spent money on travel and other expenses related to the Republican National Convention in Milwaukee, she claimed.

Giuliani’s attorneys later clarified that his travel to the convention was paid for by a media company linked to My Pillow CEO Mike Lindell, a fellow election denier and Trump associate who recently hired Giuliani.

Wednesday’s agreement comes seven months after Giuliani sought bankruptcy protection after he was ordered to immediately pay millions in damages to Freeman and Moss for the false claims he made about them in the aftermath of the 2020 election when he was serving as former president Donald Trump’s personal attorney.

In court documents, Giuliani has listed roughly $153 million in debts to at least 20 people and businesses, including Freeman and Moss. A list of top creditors filed in February said Giuliani owes more than $3.7 million in unpaid legal fees to three law firms — though he is disputing some of those bills — and more than $1 million in state and federal taxes.

The former federal prosecutor has claimed about $11 million in assets — including an estimated $5.6 million New York apartment and his Palm Beach condo, which is valued at $3.5 million. While Giuliani has put his New York property on the market, he had resisted selling his Florida home, with one of his lawyers claiming the sale could render the 80-year-old former mayor “homeless.”

The proposed agreement filed Wednesday suggested the Florida condo could soon be listed for sale.

A financial disclosure report filed in June said Giuliani had less than $100,000 in the bank at the end of May and was funding his living expenses through a rapidly diminishing retirement account. But creditors have repeatedly complained that Giuliani has not filed a complete picture of his net worth and have accused him of hiding money and assets.

Giuliani had repeatedly shifted legal strategies in recent weeks amid complaints from the judge and his creditors that he was not being fully transparent about his finances.

In December, he sought Chapter 11 bankruptcy protection, which allows an individual to reorganize and file a plan to pay off debts. But on July 1, Giuliani asked the judge to reclassify his case under Chapter 7 bankruptcy, which would hand control of his personal and business finances to an outside trustee to liquidate. The request prompted immediate objections from the election workers and other creditors, who accused Giuliani of more delay tactics.

On July 10, an hour before a hearing on the matter, Giuliani abruptly switched position yet again, asking Lane to dismiss the bankruptcy case altogether. While some of the creditors pressed the judge to appoint a trustee, Freeman and Moss supported the dismissal and Lane ultimately agreed — saying there was no evidence that Giuliani’s “uncooperative conduct will change.” Lane granted that motion on July 12 — but has not yet finalized it.

A dismissal would allow Freeman and Moss and other creditors to immediately pursue legal remedies to collect money owed to them by Giuliani.

It also allows other pending lawsuits against the former mayor that had been frozen by the bankruptcy proceeding to resume, including defamation suits by the voting machine companies Dominion Voting Systems and Smartmatic and a sexual harassment and wage theft claim by former Giuliani associate Noelle Dunphy. All are part of a committee of “unsecured creditors” that had sought relief in the bankruptcy case.

Giuliani has publicly suggested that he will seek to appeal the defamation judgment in the election worker case — which he was prohibited from doing while seeking bankruptcy protection, since litigation against him had been stayed. But the judge in that case has said Giuliani must put up a $148 million bond to pursue the appeal and pause collection efforts by Freeman and Moss, and it was not clear Giuliani had the funds to do that.