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Bankruptcy Judge Lets Giuliani Challenge $148 Million Judgment

(Bloomberg) -- Former New York mayor Rudy Giuliani won bankruptcy court permission to challenge a $148 million judgment over false claims he made against two Georgia election workers, but faces long odds if he moves to get the financial penalty excused in Chapter 11.

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US Bankruptcy Judge Sean Lane said Friday during a hearing in White Plains, New York that Giuliani can request a second trial in federal court over damages he owes poll workers Ruby Freeman and Wandrea’ ArShaye “Shaye” Moss, whom Giuliani falsely accused of rigging the 2020 election for Joe Biden. Giuliani’s legal fees in the defamation action will be covered by a legal defense fund, his bankruptcy lawyer said.

Friday’s decision is more limited than what Giuliani sought, but allows him to seek a reappraisal of amounts he owes Freeman and Moss. Still, the federal judge overseeing the defamation case could deny the request.

Giuliani had to ask his bankruptcy judge’s permission to seek a new trial because insolvency rules pause all the lawsuits he’s facing and prevent Freeman and Moss from immediately collecting their judgment against him. Friday’s hearing was the first in his insolvency proceedings.

Giuliani’s bankruptcy lawyer, Gary Fischoff, said the former mayor has limited assets, which include some real estate, retirement accounts and income from his radio and podcast show. Besides the judgment, Giuliani faces a $1.3 billion defamation lawsuit brought by Dominion Voting Systems over false claims he made alleging the company used its voting machines to rig the 2020 election.

“There is not pot of gold at the end of the rainbow,” Fischoff said in the hearing.

Judge Lane also indicated Giuliani will face obstacles if he ultimately tries to use bankruptcy to excuse the judgment. Giuliani conceded in a stipulation that he published defamatory statements against Freeman and Moss that were false, their lawyer, Rachel Strickland, said during the hearing. And Giuliani has continued to make false statements about her clients online, Strickland said.

Strickland described the $148 million judgment as a “self-inflicted wound” because Giuliani, a former federal prosecutor, ignored his legal discovery obligations during the defamation case and flouted court orders. Giuliani has said in court papers that he believes the amount of the judgment is unreasonably large.

Generally, bankruptcy law doesn’t let litigants like Giuliani use Chapter 11 to discharge judgments or other debt arising from wrongdoing. Judge Lane said Friday that the stipulation Giuliani signed appears to use legal language that specifically protects the election workers’ judgment from a potential Chapter 11 discharge.

“This is not about politics at all,” Strickland said. “He said and did despicable things.”

The case is Rudolph W. Giuliani, 23-12055, in the U.S. Bankruptcy Court for the Southern District of New York (Manhattan).

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