In a significant twist to former New York City mayor Rudy Giuliani's bankruptcy case, a judge has indicated that he is inclined to throw out the proceedings. The decision comes after lawyers representing Giuliani and his largest creditors, two ex-Georgia election workers who were awarded a $148 million defamation judgment against him, agreed that dismissal would be the most appropriate course of action.

Throughout the bankruptcy case, Giuliani has faced accusations from his creditors, claiming that he has disregarded bankruptcy laws and potentially attempted to hide assets. Dismissing the case will effectively halt his pursuit of bankruptcy protection, though it will not release him from his outstanding debts. Creditors will have the option to seek alternative legal remedies to recover at least some of the owed money, such as obtaining a court order to seize Giuliani's properties and other assets.

U.S. Bankruptcy Judge Sean Lane has announced his intention to issue a decision by the end of the week, with a hearing scheduled for 1 p.m. on Friday. Lane has ruled out converting the case to a liquidation as proposed by Giuliani, deeming it contrary to the interests of Giuliani's indebted parties. The judge cited concerns over Giuliani's lack of transparency during the proceedings as a key factor influencing his leaning toward dismissal.

Giuliani's attorney, Gary Fischoff, argued that dismissing the case would allow his client to pursue an appeal in the defamation lawsuit, which originated from his efforts to overturn the 2020 election loss of former President Donald Trump. Alternatively, Fischoff suggested that the Chapter 11 bankruptcy case could continue while a court-appointed trustee assumes control over Giuliani's assets.

However, representatives for the ex-election workers, Ruby Freeman and her daughter Wandrea "Shaye" Moss, accused Giuliani of exploiting the bankruptcy process as a "bad-faith litigation tactic." They claimed that Giuliani considered the court proceedings as a temporary break from his financial woes, while continuing to lead an unburdened life. Moss and Freeman's lawyer, Rachel Strickland, expressed concerns about potential diversion of funds outside of the bankruptcy estate, emphasizing that all dollars outside of bankruptcy are fair game for everyone.

During the hybrid in-person and Zoom status hearing held in White Plains, New York, Judge Lane reprimanded Giuliani for interrupting the proceedings and labeled Strickland's statements as "highly defamatory." Philip Dublin, a lawyer representing a committee of Giuliani's other creditors, favored keeping the bankruptcy case active with the appointment of a trustee.

Giuliani filed for Chapter 11 bankruptcy reorganization in December last year, shortly after Freeman and Moss won their defamation case. The plaintiffs alleged that Giuliani's targeting of them based on Trump's false claims of election fraud resulted in death threats that jeopardized their safety.

Previously, Giuliani had requested a conversion of the case to a Chapter 7 liquidation, which would have involved the appointment of a trustee to liquidate his assets and repay creditors. However, Fischoff noted the substantial administrative fees associated with liquidation, which would largely consume the assets. Consequently, Giuliani switched his stance to favor dismissal in order to avoid additional legal expenses related to the bankruptcy court, allowing Freeman and Moss to pursue their award through the Washington, D.C. court where their initial lawsuit was won.

If the bankruptcy case is indeed dismissed, Freeman and Moss will likely seek to have the $148 million judgment declared as non-dischargeable during Giuliani's bankruptcy. Additionally, Giuliani would face a 12-month prohibition from filing for bankruptcy protection again, as part of the dismissal.

The bankruptcy case is just one of several legal challenges that Giuliani is currently grappling with. Last week, he was disbarred as an attorney in New York for making false statements about the 2020 election loss of Donald Trump. There is also the possibility of Giuliani losing his law license in Washington, following a recommendation for disbarment in May. Furthermore, Giuliani is facing criminal charges in Georgia and Arizona related to his efforts to overturn the 2020 election, to which he has pleaded not guilty.

In his bankruptcy filings, Giuliani listed debts totaling nearly $153 million, including substantial tax liabilities, legal fees, and potential judgments from ongoing lawsuits. Meanwhile, he estimated his assets to be worth anywhere between $1 million and $10 million. Recent financial filings indicated that he had approximately $94,000 in cash and his company, Giuliani Communications, had around $237,000 in the bank as of May. Giuliani's retirement account, a significant source of income, held just over $1 million as of May, down from nearly $2.5 million in 2022 after withdrawals.

As the ruling on the dismissal of Giuliani's bankruptcy case draws near, the former mayor's financial and legal challenges continue to mount, leaving his future uncertain.