By Charlotte Spencer
On Tuesday May 11, 2021 a Texas Judge granted a motion to dismiss the National Rifle Association’s (NRA) attempt to file for Chapter 11 bankruptcy, reasoning that “the NRA did not file the bankruptcy petition in good faith because this filing was not for a purpose intended or sanctioned by the Bankruptcy Code.” Specifically, the NRA seems to have filed for bankruptcy in an attempt to avoid legal trouble in New York.
The U.S. Bankruptcy Court in the Northern District of Texas stated in its conclusion “The Court agrees with the NYAG [New York Attorney General] that the NRA is using this bankruptcy case to address a regulatory enforcement problem, not a financial one.” The case was dismissed without prejudice, meaning that the NRA can file again, however, the court strongly cautioned them on this matter.
The court pointed out several areas of concern including lack of transparency, secrecy, lack of disclosure, conflicts of interest, and “unusual involvement of litigation counsel in the affairs of the NRA…” The court further warned that it would immediately take up these concerns should the NRA file again. In other words, they would be wise not to press their luck.
Meanwhile, the case in New York is still ongoing. This involves alleged misuse of assets by the Executive Vice President (Wayne LaPierre), and others close to him, for personal benefit. In the summons dated August 6, 2020 the NYAG alleged that LaPierre and his associates exploited the NRA financially, punished those who raised concerns, hired unqualified individuals whose real purpose was to help them maintain control, and entered excessive post employment payment agreements.
In the same complaint the NYAG further accused other associates of diverting charitable assets, billing the NRA for millions of dollars in travel and entertainment, wasting charitable assets, concealing and misreporting information, and causing the NRA’s reports filed with the NYAG to be materially false. If the NYAG wins this could result in the NRA being dissolved. It could also result in LaPierre and these associates being banned from acting as fiduciaries for New York charities, and the voiding of transactions in question, many of which were for large amounts of money.
Shortly after the May 11 decision in Texas the NYAG posted a statement on the matter stating that the fight for dissolution of the NRA will continue in New York.
This is one of a series of articles that we are doing on gun law. Check back for more on this case as it continues. This article was last updated May 11, 2021.
The information provided in this article should not be considered legal advice or a substitute for legal advice. Biometrica is not a law firm and cannot offer legal advice.