Federal Judge Dismisses NRA Bankruptcy Case; ‘Not in Good Faith’

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Federal Judge Dismisses NRA Bankruptcy Case; ‘Not in Good Faith’ IMG NRA-ILA

U.S.A.-(AmmoLand.com)- A federal bankruptcy judge in Texas has handed the National Rifle Association a stinging defeat in the organization’s effort to leave New York State, where it has been incorporated since 1871, and relocate in Texas.

The ruling by Judge Harlin Hale sets the stage for New York State Attorney General Letitia James to move ahead with her lawsuit that seeks to dissolve the association, according to Bloomberg News. The ruling came after 11 days of trial in Texas. Earlier this year, NRA filed for bankruptcy, telling members that it was part of a strategy to relocate to the Lone Star State.

But Judge Hale noted in the closing lines of his 38-page ruling, “The Court finds 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.”

Judge Hale added, “The Court is not dismissing this case with prejudice, but should the NRA file a new bankruptcy case, this Court would immediately take up some of its concerns about disclosure, transparency, secrecy, conflicts of interest of officers and litigation counsel, and the unusual involvement of litigation counsel in the affairs of the NRA, which could cause the appointment of a trustee out of a concern that the NRA could not fulfill the fiduciary duty required by the Bankruptcy Code for a debtor in possession.”

James filed her lawsuit last August, asserting NRA had diverted millions of dollars “to fund luxuries for officials including long time Chief Executive Wayne LaPierre,” Reuters reported.

NRA spokeswoman Amy Hunter provided AmmoLand News with the following statement via email:

“The NRA remains committed to its members and our plan for the future,” says NRA CEO & EVP Wayne LaPierre. “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. 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. The NRA will keep fighting, as we’ve done for 150 years.” 

The judge explained upfront in his ruling, “The question the Court is faced with is whether the existential threat facing the NRA is the type of threat that the Bankruptcy Code is meant to protect against. The Court believes it is not. For the reasons stated herein, the Court finds there is cause to dismiss this bankruptcy case as not having been filed in good faith both because it was filed to gain an unfair litigation advantage and because it was filed to avoid a state regulatory scheme. The Court further finds the appointment of a trustee or examiner would, at this time, not be in the best interests of creditors and the estate.”

The NRA has been under fire for more than two years, beginning with what has been described as an “attempted coup” at the annual members’ meeting in Indianapolis in 2019. There was a shakeup at the top, with then-NRA President Lt. Col. Oliver North departing, and LaPierre surviving the alleged coup.

As noted by Reuters, “President Joe Biden’s administration opposed the NRA in the trial. The Justice Department’s bankruptcy watchdog, the U.S. Trustee, urged Hale to dismiss the bankruptcy.”

Biden would like nothing better than a damaged NRA, which has been his major speed bump over the years as he backed or championed various gun control efforts. Biden brags that he “beat the NRA twice” on gun control issues, and he is now pushing an anti-gun agenda that includes a ban on so-called “assault weapons” and “high capacity magazines.”

While James made several allegations in her August 2020 lawsuit, NRA has fired back, counter-suing and asserting the legal action is politically motivated.

During a conference call with the media, James asserted, “The NRA continues to engage in mudslinging but the reality is the rot runs deep.”

She told reporters she intends to pursue the legal action, which is now in the discovery phase and that will continue into early next year. There will then be a trial and she repeatedly stated her intent to seek restitution, and that could include dissolution of the organization.

LaPierre and NRA have denied any wrongdoing, a fact Reuters was careful to include in its coverage.

It is not clear what NRA’s next move will be. Judge Hale left the door open for the association to file a new bankruptcy case.

Back on Jan. 15, in an open letter to NRA members, LaPierre contended, “You know that our opponents will try to seize upon this news and distort the truth. Don’t believe what you read from our enemies. The NRA is not ‘bankrupt’ or ‘going out of business. The NRA is not insolvent. We are as financially strong as we have been in years.”

But with Judge Hale’s ruling, James can now become more aggressive. The road ahead could be rocky for the 150-year-old gun safety organization, which even now should not be underestimated.


About Dave Workman

Dave Workman is a senior editor at TheGunMag.com and Liberty Park Press, author of multiple books on the Right to Keep & Bear Arms, and formerly an NRA-certified firearms instructor.

Dave Workman

23 Comments
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Terry
Terry(@tbell50)
6 months ago

NRA needs to get rid of its CEO / president he is anything but squeak clean.

Tionico
Tionico(@tionico)
6 months ago

I have to agree with thi judge that the cause, or underlying reason, for this bankruptcy is NOT that for which bankruptcy was established. At the same time ,the rotten prosecuting attorney James is abusing the courts to get her way. She has ONO gorunds for attempting to dismantle this organisation. Yes, clean it up dump PeePee la Pew, force a reorganisation amongst the leardership. Yes, there are far too many trustees riding the gravy train. But no, she has NO cause to persue her wish that the organisatin be dismantled. She OUGHT to be taking after LaPierre for his… Read more »

vepr
vepr(@vepr)
6 months ago

Gun guys are so stupid. They have stood by an allowed the looting of a great American iconic institution. Gun guys should have tarred and featherd wayne La PU 20 years ago. Instead they looked the other way, and made excuses for La Pu and his cronies while they looted, pillaged , raped, and robbed the once noble NRA into a feeble shell of itself. It should have been gun guys that cleaned up the NRA. Instead, they leave it up to a sworn enemy of the second amendment to do what gun guys are too stupid to do. I… Read more »

Roland T. Gunner
Roland T. Gunner
6 months ago
Reply to  vepr

It has nothing to do with “gun guys” and everything to to with corrupt, lying, sellout Uncle Wayne and his cronies. NRA has been selling out our 2nd Amendment rights since 1934, allowed by “I even own a gun” types of fudd deer hunters and bird hunters, who were not particularly pro gun, just pro shooting deer and birds.

vepr
vepr(@vepr)
6 months ago

You just made my point.
Youve known about La Pu’s looting of the NRA for dacades.
What did you do about it til now ?

Dee
Dee(@dee45)
6 months ago
Reply to  vepr

I believe you’re right! It’s really more like the right Trump supporting fascists gun guys are stupid!! Roland did validate your point. They “type” a good game but they just like their pictures taken instead of taking action. I have said it many times. If you want the 2nd amendment to survive you get the Democratic gun owners on your team. Don’t shun them; luv them! Because whatever you think about the left side, you know they fight for real. Some would say they fight unfair. You actually folks who would really fight for what they believe is right.

JNew
JNew(@j_new)
6 months ago

The idea is still worth fighting for, obviously. But just like the Republican party (or any party for that matter), absolute power corrupts absolutely. Time to clean house, keep the number of leaders light, and get back to basics. People like LaPierre need a well-deserved pistol-whipping. I’m sick of the indolence of today’s American.

Roland T. Gunner
Roland T. Gunner
6 months ago
Reply to  JNew

Whomever gave that thumbs down can go back to sitting on it.

nrringlee
nrringlee(@nrringlee)
6 months ago

The issue of reincorporating the NRA came up over 20 years ago. Getting out of a Progressive Utopia and moving to friendly grounds was the issue to protect the organization from assaults such as the organization is suffering today. I will say it. We told you so. But that objection was met with the typical hubris of the ‘leadership’ and now, here we stand, pantsed by a leftist AG in a Progressive Utopia. It is time for a coup, a renewal of leadership that is committed to the volunteer nature of NRA and its mission. Get out of the DC… Read more »

rancott
rancott(@sscenters)
6 months ago

I paid to be a lifetime member, I WANT A REFUND !!!!

Roland T. Gunner
Roland T. Gunner
6 months ago
Reply to  rancott

Come on sumbody, nullify this thumbs down.

musicman44mag
musicman44mag(@xman)
6 months ago

done

Hazcat
Hazcat(@havoc816)
6 months ago

The NRA is irrelevant. WLP killed it. Until he and 90% of the leadership and board is replaced the organization has no chance of recovering or being a force in the 2A fight. Worse, they are nothing more than a clown show laughing stock.

JIAZ
JIAZ(@jiaz)
6 months ago

“The Court finds there is cause to dismiss this bankruptcy case as not having been filed in good faith.” Judge Harlin Hale The LaPierre Organized Crime Family, referred to in government documents by its front name, The National Rifle Association, has been acting and conducting business in “bad faith” for decades. “We” don’t need Wayne’s NRA. Truth is we never have. We’ve just been subjected to extremely clever, goebbels-esque marketing propaganda for decades. “Non-Profit” my A$$. Indictments are inevitable. Join and actively support your individual state’s most Pro-2A organization. Don’t depend on “any” national organization to come to the rescue.… Read more »

Green Mtn. Boy
Green Mtn. Boy(@reen-mtn-boy)
6 months ago

This is due to long time Chief Executive Wayne LaPierre Pew Pew,scumbag and thief.

Darkman
Darkman(@darkman)
6 months ago

Like anybody with an IQ above 25 didn’t see this coming. Filing bankruptcy to avoid monetary liability has never passed muster in the Courts. The only way to save the NRA now is to let it burn down and rebuilt from whats left. If it’s worth rebuilding? It has been a feckless machine run by money grubbing Elites for decades. Who were more interested in their own monetary and Elite class pursuits than in their members 2A Concerns/Rights. I am a Life Member only because I paid for my membership in a lump sum. Have Not and Will Not offer… Read more »

Rob Pincus
Rob Pincus(@rpincus)
6 months ago

Updated: I’m torn here. There is no doubt that his ruling is appropriate and good for “justice”. The Bankruptcy Gambit was a scam from inception…. the Brewer Lawfirm is the big winner here. No trustee appointment means that he remains Wayne’s lawyer and Wayne remains in power to sign off on the bills for the next 10-20 Million Dollar scheme to delay his inevitable ousting and possible conviction. Expect an expensive and useless appeal to be filed. A trustee being assigned by the court was probably the best chance for NRA Reform. The Court keeping jurisdiction was also going to… Read more »

Finnky
Finnky(@finnks)
6 months ago
Reply to  Rob Pincus

I understand thumbing down the author, however this comment contains sound advice on how to get the most bang for your bucks. I try to direct my donations to go where they will do the most good. NRA is not it.

Hazcat
Hazcat(@havoc816)
6 months ago
Reply to  Rob Pincus

No one cares what you think Pincus. You’re as welcome as the IRS at a business meeting.

Go grift somewhere else.

KCsmith
KCsmith(@kcsmith)
6 months ago
Reply to  Rob Pincus

Your opinion is worthless.
Nobody cares what you think or have to say.

You’ve lost all credibility, Pincus, from you recent article where you personally call for further infringement of the Second Amendment.

I’d say the smart thing for you to do is just shut up, or maybe opine on an article written by one of your buddies over at Gifford’s instead.

You’re a traitor to the cause, an embarrassment, and a fool.

Hazcat
Hazcat(@havoc816)
6 months ago
Reply to  KCsmith

Did ya ever notice how lefties like Pincus navel gaze for paragraphs trying to convince you that they are ‘thoughtful’ and want to be ‘fair. Then when they are called on the BS they ‘update’ (edit) the post to sling more BS in the hopes of covering the mistakes.

I called out Pincus for what he is 10 years ago. Too many didn’t want to believe and were willing to give him the benefit of doubt. That has been a failing of our side and I am glad to see it ending.

pigpen51
pigpen51(@pigpen51)
6 months ago
Reply to  Rob Pincus

Rob, You and I have exchanged points of view on other topics on different sites. And while we have disagreed, I have always held you in high esteem as a person, who was unafraid to voice their point of view, and stand behind it. Something that many who are always willing to sling barbs at you seem to be unwilling to do. So it is with a great deal of joy that I stand in support of you on this issue of spending money on other places that support the gun rights of the individual, instead of sending money to… Read more »

KCsmith
KCsmith(@kcsmith)
6 months ago
Reply to  pigpen51

Are you aware that last month Rob Pincus published an article cowritten with the former head of the Brady Campaign stating he believes in the expansion of background checks?

Did you know he is currently supporting Liz Cheney as the Republicans remove her from her position in the House?

That’s just what he’s done in the last few weeks. His full history is just as sordid.

Rob Pincus is an enemy of the Second Amendment, period. He’s proven it time and time again. He’s here for the money, not the cause.

Do not support traitors!