A judge threatened to cut off former New York Mayor Rudy Giuliani's line Wednesday after he accused his bankruptcy creditors of "defamatory remarks."
Less than an hour before a scheduled hearing, Giuliani's lawyers changed their request to move from a Chapter 11 to a Chapter 7 bankruptcy — and instead asked for the case to be dismissed.
In a filing, Giuliani said that he had reviewed an objection filed by Ruby Freeman and Wandrea' ArShaye Moss. The former mayor has been ordered to pay the two women nearly $150 million after losing a defamation lawsuit connected to the 2020 presidential election.
"The Debtor has changed his position on the appropriate disposition of his pending Application to Convert Chapter 11 to Chapter 7," the filing said. "The Debtor now requests that the Court grant the relief requested by the Freeman Plaintiffs and dismiss the case."
Chapter 7 bankruptcy is liquidation of assets, while Chapter 11 is a reorganization that allows businesses to continue while a plan to pay creditors is devised.
At Wednesday's hearing, Zach Schonfeld reported that Giuliani's bankruptcy was "devolving into chaos."
"After some fiery remarks from Ruby Freeman and Shaye Moss's lawyer, Giuliani (who called into hearing) interrupted and said the lawyer was making 'defamatory remarks,'" Schonfeld revealed. "The judge threatened to cut off Giuliani's line."
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Freeman and Moss have called for the bankruptcy to be dissolved, arguing that most of Giuliani's wealth would go to professional fees. Giuliani's other creditors, however, wanted the Chapter 11 bankruptcy to proceed.
"Dismissing case could enable Freeman + Moss to start going after Giuliani's assets outside of the bankruptcy system," Schonfeld noted. "It could leave other creditors out to dry, hence why the committee wants to do Chapter 11 trustee (which would still strip Giuliani of control of his finances)."
CNN noted that Giuliani remains "flush with cash" despite declaring bankruptcy last year.
