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A Texas federal judge has dismissed the National Rifles Association’s bankruptcy petition, ruling that the Chapter 11 filing of the armed rights group was intended to circumvent a lawsuit by the New York Attorney General.
Judge Harlin Hale wrote in Tuesday’s ruling that the bankruptcy case had not been filed “in good faith,” both because it was filed to gain an unfair litigation advantage and because it was filed to avoid a scheme. state regulator “.
The ANR’s bankruptcy, filed late Friday in January, was a shock to observers, as there were few indications of immediate financial difficulties in the prominent gun lobby, led by Wayne LaPierre, its chief executive and vice president. executive.
It came several months after Letitia James, the progressive attorney general of New York, sued the NRA in state court, trying to break it. The state had argued that the weapons lobby had been used as a personal guard for his leadership, including LaPierre.
At the time of the Chapter 11 petition, LaPierre wrote in a public letter, “The plan can be summed up in one simple way: we are DUMPING New York and we are pursuing plans to reincorporate the ANR into Texas.” LaPierre later noted that the ANR was “as strong financially as we have ever been in years.”
James asked the bankruptcy court to dismiss the case. Some other ANR stakeholders had attempted to appoint a third examiner or administrator.
During an 11-day trial in Texas bankruptcy court to decide whether to dismiss the petition, details of the NRA and LaPierre’s business practices were exposed, some of which the court described as “worthy of value.”
Hale wrote that he was concerned that LaPierre had created the bankruptcy petition with little input or knowledge from other ANR leaders.
He wrote that “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 short of shocking.”
Hale acknowledged in his decision that the group was “financially sound” and that creditors would likely be returned more quickly outside of a court-supervised reorganization.
James wrote on Twitter on Tuesday afternoon that he would continue to pursue RNA in state courts: “The NRA he fails to dictate whether and where he will be held accountable for his actions. . . No one is above the law. “
“Given that bad faith was manifesting from the outset, one has to wonder what the hell the ANR would think with the bankruptcy strategy,” said Adam Levitin, a law professor in Georgetown who has followed the case.
He added: “That being said, the remedy – dismissal without prejudice – is the least bad result.
“LaPierre continues to control the NRA, which he would not have, if the court did not dismiss the case, but appoint an administrator.”
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