Rudy Giuliani, the former mayor of New York City and current personal lawyer for President Donald Trump, has filed for chapter 11 bankruptcy protection in the Southern District of New York. This comes after he was hit with a defamation lawsuit from a former associate that left him with an $2 million court judgement.
Giuliani has been an important ally of President Trump and was one of his key figures in his legal team defending their election challenge, and is also considered a potential appointee for a cabinet position should Joe Biden become president in 2021.
The case is the result of a defamation suit brought by former Giuliani associate Lev Parnas, which alleged Giuliani caused Parnas to suffer millions of dollars of damages as a result of defamatory statements he made about him.
In March of this year, a court ruled in favor of Parnas and ordered Giuliani to pay him $2 million in compensation. With Giuliani apparently unable to pay the multi-million dollar judgement, he was forced to file for Chapter 11 bankruptcy in order to protect his assets from Parnas.
The chapter 11 filing is not expected to significantly impact Giuliani’s separate law practice, which houses the operations of Giuliani Partners and Giuliani Security & Safety. The filing will also not affect Ivanka Trump and Jared Kushner’s companies, as the two are not currently involved in any of Giuliani’s businesses.
The filing also means that Giuliani’s creditors, including Parnas, will have to wait in line to get paid. Under the terms of the Chapter 11 protection, Giuliani may pay some of his creditors, including Parnas, as much as 50% of the judgement.
The news of Giuliani’s Chapter 11 filing is sure to be met with criticism from those who oppose the former mayor, including his political opponents. It will also be interesting to see how this affects Giuliani’s standing with President Trump, who remains committed to defending Giuliani as one of his personal attorneys.
No matter how the political fallout pans out, one thing is for sure: Giuliani’s failure to face the consequences of his actions has landed him in yet another difficult situation. Best of luck to him as he finds a way out of this financial mess.