The Defamation-to-Bankruptcy Pipeline in the United States and Around the World

It has never been easier to ‘go viral’. With nothing more than a microphone, a smartphone, and some computer software, an influencer in today’s media landscape can reach millions.  But that ease comes with risk: defamation lawsuits are on the rise, sending content creators to bankruptcy courts with judgments that far exceed everything they own. Last year, I analysed this trend in American law, which I call the ‘defamation-to-bankruptcy pipeline’, in Defamation, Bankruptcy & the First Amendment, published in the Journal of Free Speech Law.

Ammon Bundy, an anti-government activist who ran for governor of Idaho in 2022, now joins mayor Rudy Giuliani and podcaster Alex Jones on the growing list of public figures hit with massive defamation judgments.  As part of his gubernatorial campaign, Bundy accused St. Luke’s Health System of kidnapping, trafficking, and killing children.  St. Luke’s fought back, suing Bundy in Idaho state court for defamation, invasion of privacy, intentional infliction of emotional distress, unfair business practices, and more.  After Bundy declined to participate in the lawsuit, the Idaho court entered a default judgment against him for $52 million in compensatory and punitive damages (with an ample post-judgment interest rate of 10.25% per year).

In July 2024, Bundy filed for bankruptcy in Utah, planning to resolve his debt with St. Luke’s (No. 4:24-bk-23530).  In fact, the money judgment from Idaho state court was the only debt that Bundy listed on his official schedules: no mortgage, no car loan, no student debt — just $53 million owed to St. Luke’s for ‘Legal Theft’.

The problem for Bundy, just like for Giuliani and Jones, is that debts for ‘willful and malicious’ injury are not dischargeable in a U.S. bankruptcy case, and the court was not writing on a clean slate.  The judge pointed out that it could not undo the judgment that the Idaho court had already issued, lined up the elements of the causes of action, determined that the claims for defamation could not be discharged in the bankruptcy, and then concluded that the entire amount (apart from attorneys’ fees and costs) had to be treated as a ‘lump sum’ — completely nondischargeable.  St. Luke’s Health System, Ltd. v. Bundy (In re Bundy), No. 24-02130, 2025 WL 2231814 (Bankr. D. Utah. Aug. 5, 2025).

The Bundy opinion raises all the same issues as those discussed in my article.  What does ‘willful and malicious’ mean in the U.S. Bankruptcy Code? How should bankruptcy courts apply final judgments and factual determinations of courts that have already ruled?  And how robust is bankruptcy’s famous ‘fresh start’, really?

Among other things, the article explores what it means that a debt be ‘for’ willful and malicious injury under the U.S. Bankruptcy Code.  Does that mean that the elements of the claim require a factual finding of willfulness and maliciousness, as in many intentional torts?  Or does it simply mean that the debtor actually acted willfully and maliciously, regardless of whether those findings were necessary? The answer can have profound effects on a bankruptcy case, determining whether millions of dollars can be wiped away or stick to a debtor for the rest of his or her life.  I also analyze how the Bankruptcy Code’s rules line up against the First Amendment to the U.S. Constitution, concluding that the Code is safely within constitutional limits but warning against ways that an anti-speech Congress could push it into constitutional danger.

Even though debtors like Giuliani, Jones, and Bundy will not be sympathetic to many readers, I raised concerns about the chilling effects of nondischargeable debt.  ‘[I]f liability has a chilling effect on speakers’, I pointed out, ‘the threat of nondischargeable debt is positively freezing’. Nondischargeable debt casts a lifelong shadow over the debtor for the rest of his or her life; many such debtors keep their heads down, their income low, and their assets off their books.

That disincentive to speak openly becomes even more concerning when we realize that defamation claims can be used to punch down, too. It is not only the harassed election worker, the doxxed parent, or the beleaguered medical provider who can bring a defamation claim to protect her reputation, security, and peace of mind.  We also see the victim of sexual harassment who shares her story, only to find herself the defendant in a defamation lawsuit brought by her harasser.  There’s no easy solution to this problem: drawing lines based on the content of speech requires narrowly tailored regulations under American law, a challenging standard to meet.

These challenges lead us to fundamental questions of forgiveness: When, if ever, should we discharge ‘debts arising from morally repugnant behavior’?  Should we enact a policy of broader discharge after sustained, good-faith efforts to repay? These questions matter for both consumer and business bankruptcy lawyers, since three circuits in the United States now apply the discharge exceptions in small business cases (an outcome that Professors Ralph Brubaker, Brook Gotberg, and I recently opposed).  The result clashes with the express language of the statute and undercuts Congress’s policy choice to smooth the way for small businesses in bankruptcy, something Jeffrey Katz and I wrote about in the George Washington Law Review.

Nor is this a purely American problem. Indeed, if American lawyers are seeing defamation debt end up in bankruptcy court, one must assume that English lawyers are seeing it, too.  English speakers are subject to much tighter speech regulations than their American friends, so much so that ten years ago, commentators raised concerns about ‘libel tourists’ coming to England or Wales for a favourable forum.  Of course, the legal landscape continues to shift.  In response to those concerns, the United States passed the SPEECH Act in 2010, and the United Kingdom passed the Defamation Act 2013. 

The phenomenon of defamation exposure leading to insolvency proceedings is a global one.  In the anglophone common law jurisdictions alone, New Zealand has blogger Cameron Slater (2019); the United Kingdom has far-right activist Tommy Robinson (2021); Canada has political scion Chelsea Hillier (2022) and Australia has liberal staffer Brittany Higgins (2025) and politician John Pessuto (2025). 

Across the globe, communications lawyers need to stay in close contact with their bankruptcy colleagues. A strategic bankruptcy filing is now part of the defamation playbook, and communications lawyers might find themselves knocked off balance if they do not know what to expect. Bankruptcy lawyers, for their part, need to understand the elements of defamation causes of action (slander, libel, false light, and invasion of privacy) and appreciate the policies that underlie them. 

And all of us, as policymakers and as citizens, need to grapple with what U.S. Supreme Court Justice Neil Gorsuch called our ‘new media world’. Speech is easier to publish than ever — easier, too, to turn a profit.  Yet it comes with new risks, particularly in an overheated and sharply polarized world.

The post is based on the author’s paper which is accessible here.

Christopher D. Hampson is an Associate Professor of Law at the University of Florida, Levin College of Law.