Dear Reader,

What do you do when a judge enters a $148 million defamation judgment against you? If you’re Rudy Giuliani, you turn around and file for bankruptcy in the Southern District of New York the next day.

Under Section 362 of the Bankruptcy Code, an automatic stay of further proceedings against a debtor and a debtor’s property goes into effect immediately after a bankruptcy filing. In this case, that meant that Georgia election workers Ruby Freeman and her daughter Shaye Moss were unable to collect on their judgment, even though Giuliani acknowledged that he owned two substantial pieces of property, a co-op in Manhattan and an apartment in Palm Beach, Florida.

You probably remember the facts from the House January 6 committee hearings. Freeman and Moss offered some of the most riveting testimony of the entire proceedings. Following the 2020 election, there were allegations from the Trump camp of fraudulent vote counting in Georgia. Supposedly, there were suitcases full of ballots that were counted more than once. A so-called smoking gun video started circulating and the far-right website, The Gateway Pundit (TGP), posted it. Rudy Giuliani ran with the story, repeating it widely. Freeman and Moss were publicly identified and, within 24 hours, began receiving threats.

None of it was true. The “suitcases” were regular ballot containers, and the ballots were only counted once. Indeed, the video confirmed that there were no irregularities in the vote count. But the reckless lies affected four generations of the family, including Freeman’s mother and Moss’s teenage son. The threats were so pervasive that the FBI told them they needed to leave their homes. They continue, according to one of their lawyers, Rachel Strickland at Wilkie Farr & Gallagher, to live carefully to avoid disclosing their current location.

It took three years, but in December 2023, a judge found Giuliani had repeatedly defamed the women, and a jury awarded them $148 million in damages.

That’s where the subterfuge involving bankruptcy proceedings began. Plaintiffs can’t immediately collect on a judgment they win in federal court. Normally, there’s a 30-day period before they can go after a defendant’s assets. But the judge in Giuliani’s case waived that waiting period, finding there was good reason to believe he would try to hide or dissipate assets in the meantime. Instead of waiting for liens to be filed on his property, Giuliani filed for bankruptcy the next day. According to Strickland, Freeman and Moss’ lawyer, he did it that quickly to avoid having his property taken to satisfy the defamation judgment in favor of the women.

There was one more legal wrinkle: Giuliani was entitled to take an appeal in the defamation case. But unless he posted an appeal bond to guarantee he would make good on the $148 million judgment against him, Freeman and Moss were free to go after his assets during the appeal. No lender was going to take that kind of risk on Giuliani. He didn’t have that kind of assets. Nor did he have a real shot at winning on appeal. Giuliani had conceded during the lawsuit that the statements he made about the women were false.

However, when he filed for bankruptcy, the automatic stay came into effect, preventing anyone, including Freeman and Moss, from pursuing his assets even though he had failed to post an appeal bond.

More delay.

Freeman and Moss’s lawyers also filed suit against TGP, the website that posted the video and the false claims, for defamation. TGP didn’t wait for the case to get in front of a jury. They filed for bankruptcy ahead of the scheduled deposition of founding editor Jim Hoft.

More delay.

What happened next is very unusual according to Strickland, the lawyer.

The lawyers believed they could establish that the only reason Giuliani filed for bankruptcy was to try and game the defamation case and that TGP was also using bankruptcy as a device to manipulate the litigation. People whose debts overwhelm them are entitled to protection in bankruptcy, even if they are involved in lots of litigation over those debts. But the courts have firmly established that a person whose only reason for seeking bankruptcy is to use it as a strategic tool in litigation doesn’t get to be there. The lawyers thought they had a strong case because Giuliani didn’t behave the way that most debtors do. He didn’t try to sell any of his assets or work out any of his debts. All he did was try and convince the judge he should be able to file an appeal in the defamation case without having to obtain an appeal bond. The lawyers argued Giuliani fell into that category of people who were entitled to the protection of bankruptcy court.

Giuliani had repeatedly told the court he had no money, but he had a radio show until mid-2024 and had also inked a deal to launch Rudy Coffee. You can still buy it online at $29.99 for a 2 lb. bag, at rudy.coffee. The weight of the evidence was too much. In a highly unusual move, the judge threw out the bankruptcy case.

But here’s the rub. After all that Freeman and Moss have been through, Giuliani has managed to keep the case in bankruptcy despite the dismissal so that they can’t proceed against him. He’s done this by refusing to sign off on a final order providing for payment of administrative fees–an order that is necessary to terminate the bankruptcy proceeding. As this charade dragged on throughout July, the Judge finally wrote in an order, “In the vast majority of cases facing dismissal, this issue is resolved without Court intervention. But with no resolution on the horizon here, the Court must take an active role in determining how to provide for payment of these administrative expenses if dismissal is to occur.” But as long as the case lingers in court, Giuliani continues to receive the protection of a bankruptcy proceeding the judge has already determined he’s not entitled to. Although the judge has talked about concluding the proceeding “expeditiously,” he’s suggested an evidentiary hearing, which means more delay. Giuliani is succeeding at being an obstructionist.

TGP is in a different position. There is no decision against them yet. They are still in discovery, trying to avoid Jim Hoft’s deposition. A different judge, this time in Florida, rejected the legitimacy of TGP’s filing as an effort to hide behind bankruptcy proceedings. The TGP case was dismissed from bankruptcy last week, just like Giuliani’s. Now, that defamation case can move forward, too.

It’s taken a lot of time and effort to establish that both Giuliani and TGP were abusing the protections courts provide to litigants in order to defeat the relief Freeman and Moss are entitled to. It’s now incumbent upon the judges in both of these cases to reject any further delay. Some delays in litigation are necessary and equitable. These cases have stretched well beyond that point.

Getting a bankruptcy case dismissed is incredibly difficult. Debtors are permitted to file for bankruptcy even when they are inundated with litigation. Dismissal requires proof that they are “bad faith filers” and that the bankruptcy is not in the best interests of the creditors. But here, the abuse of bankruptcy proceedings was so apparent that two different judges ordered dismissals. The men who spread lies about these women, damaging their well-being, aren’t entitled to any grace. The courts need to stop giving them any so Ruby Freeman and Shaye Moss can finally receive a measure of justice.

Stay Informed,

Joyce