Judge dismisses NRA bankruptcy case in blow to the gun group

Cornelia Mascio
Mag 12, 2021

Hale's dismissal is without prejudice, meaning the NRA can file for bankruptcy again, but the judge said management issues could require appointing a trustee to oversee its affairs if it sought Chapter 11 again.

The NRA's attempt at declaring bankruptcy in its bid to leave NY state for Texas has been dismissed, putting the Second Amendment rights organization at risk of "complete and total shutdown" by New York's attorney general. Her suit, filed in state court in Manhattan after an 18-month investigation, cited allegations that high-ranking NRA executives diverted millions of dollars for lavish personal trips, no-show contracts for associates, and other questionable expenditures.

Lawyers for New York Attorney General Letitia James argued the bankruptcy filing was an effort by NRA leaders to avoid accountability for using the group's coffers as their piggybank. "The Court finds that the NRA did not file the bankruptcy petition in good faith because this filing was not for a objective intended or sanctioned by the Bankruptcy Code".

Closely aligned with Republicans including former President Donald Trump, the NRA has always been instrumental in thwarting Democratic-backed gun control measures in the U.S. Congress. Lawyers for NY and the NRA's former advertising agency grilled the group's embattled top executive, Wayne LaPierre, who acknowledged putting the NRA into Chapter 11 bankruptcy without the knowledge or assent of most of its board and other top officers. "The court believes it is not". Though headquartered in Virginia, the NRA was chartered as a nonprofit in NY in 1871 and is incorporated in the state.

LaPierre and the NRA have denied wrongdoing.

Mak went on to report that in a media call following the news, James said that she will press forward for a 2022 trial against the NRA, where she is seeking the removal of CEO Wayne La Pierre and dissolution of the organization, along with restitution and penalties.

The NRA filed for Chapter 11 protection in January with the goal of reincorporating in Texas and escaping what it called a corrupt political and regulatory environment in NY.

LaPierre testified that he feared James would try to put the NRA into receivership.

Internal upheaval has also plagued the NRA in recent years, including an effort to oust LaPierre over alleged mismanagement. "Their loss is a huge gain for the gun safety movement".

The NRA has called New York's lawsuit politically motivated.

"It will be onerous if not impossible for the NRA to effectively oppose gun safety and lobby lawmakers while simultaneously fighting court battles and mounting debt", said Watts, whose organization is part of the Michael Bloomberg-backed Everytown for Gun Safety.

A spate of mass shootings in the United States this year prompted Biden in April to call gun violence "a national embarrassment".

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