Federal Judge Dismisses NRA Bankruptcy Claim

A federal bankruptcy judge dismissed the National Rifle Association’s bankruptcy claim. In his ruling, Judge Harlin Hale issued a written order dismissing the bankruptcy claim. Specifically, he said that the gun-rights group did not file the case in good faith.

Earlier in August 2020, New York Attorney General Letitia James filed a civil lawsuit that sought to dissolve the NRA. In particular, she alleged that some NRA executives committed fraud, financial misconduct, and misuse of charitable funds owned by the NRA. In a bid to avoid the lawsuit, LaPierre led the filing of a bankruptcy claim last January in Texas. 

RELATED: New York Attorney General Seeks to Dissolve NRA

Bankruptcy Claim Made in Bad Faith

Earlier, the NRA petitioned the federal court to allow the NRA to incorporate in Texas instead of New York. While the organization’s headquarters is in Virginia, the NRA chartered as a nonprofit in New York. This incorporation into the state of New York happened way back in 1871.  

“The Court believes the NRA’s purpose in filing bankruptcy is less like a traditional bankruptcy case in which a debtor is faced with financial difficulties or a judgment that it cannot satisfy and more like cases in which courts have found bankruptcy was filed to gain an unfair advantage in litigation or to avoid a regulatory scheme,” Hale wrote.

Board Didn’t Know NRA Filed For Bankruptcy

The court’s decision came out after 11 days of testimonies and arguments. The current NRA  Executive Vice President, Wayne LaPierre, admitted putting the NRA into Chapter 11 bankruptcy without informing members of the board and other officers.

“Excluding so many people from the process of deciding to file for bankruptcy, including the vast majority of the board of directors, the chief financial officer, and the general counsel, is nothing less than shocking,” Hale noted. 

In his defense, LaPierre said he kept the Chapter 11 1proceedings secret to avoid leaks within the organization. Additionally, he said that the group’s 76-member board remains divided in its support.

Meanwhile, NRA Board member Phillip Journey gave a single word to describe the development: disappointed. 

Fight For Gun Rights

In a statement, LaPierre pledged to continue fighting for gun rights. “Although we are disappointed in some aspects of the decision, there is no change in the overall direction of our Association, its programs, or its Second Amendment advocacy,” LaPierre posted on Twitter. 

“Today is ultimately about our members, those who stand courageously with the NRA in defense of constitutional freedom. We remain an independent organization that can chart its own course, even as we remain in New York to confront our adversaries,” he posted.

Turmoil Within the NRA

Meanwhile, the New York AG's office argued that the NRA leadership only made the bankruptcy claim to escape accountability. Allegedly, executives used the group’s funds for personal expenses.

The NRA countered that the request for Chapter 11 is a legitimate effort to avoid political persecution from the office of James, a Democrat. 

Hale dismissed the NRA’s case without prejudice, which means the organization can try to file a new case. However, he warned that once the group does so, he will take up concerns about the group’s transparency policies and apparent conflicts of interests. Also, Hale said that the NRA can still incorporate in Texas, but will require permission from AG James. 

Texas Awaits The NRA

Meanwhile, Texas remains ready to accept the NRA should they manage to pull off the move. In fact, Republican Gov. Greg Abbott tweeted that “Texas stands with the @NRA and we look forward to working with the Association on their plans to move to Texas.”

Watch the CBS New York video reporting that a federal judge dismisses the National Rifle Association's bankruptcy case:

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Are you a member of the National Rifle Association? Do you support its plans to move to Texas? Also, were you aware of its plans to file bankruptcy?

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