Judge in NRA Bankruptcy Case Needs to Appoint an Examiner, NOT Dismiss

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USA – -(AmmoLand.com)- The NRA Board of Directors (or at least a number of the members) met in Dallas on Saturday, May 1, 2021, for the express purpose of approving a Reorganization plan to be submitted to the bankruptcy court.

I’m not sure how many members were in attendance, but I’m pretty sure it was not much more than half of the 76 members. (It only takes 25 to constitute a quorum.) Director Rocky Marshall put forward a motion to expand the Special Litigation Committee, which has been empowered by the Board to oversee the bankruptcy and other litigation, and which is made up of just the three officers: President Meadows, 1st VP Cotton, and 2nd VP Lee. Marshall’s proposal was to add five additional Directors to the committee. It was rejected overwhelmingly, with only two votes in favor.

That should give you an idea of just how tightly in lock-step this Board is.

As to the Reorganization Plan… I’m not a lawyer or any sort of expert on these matters, but to my layman’s eye, the plan looks completely hollow. While it contains a whole lot of words, it has no substance. The big feature is the proposed creation of a Chief Compliance Officer position answerable directly to the Board, to make sure the Association is always in compliance with its bylaws and other applicable laws and regulations. Beyond that, it just says that they will hire a reorganization expert and modify the Bylaws and structures of the NRA in accordance with that expert’s suggestions – to the extent that the Board agrees. Everything else in the document is just legal base-covering to the effect that all of the obligations and liabilities of the current NRA will convey to the new Reorganized NRA.

Oh… And there’s a clause to ensure that a whole bunch of money is set aside up-front to make sure “professionals” (Brewer and his lawyer pals) get paid first, no matter what else happens.

I said over a year ago that the Board had two choices: Clean house (firing LaPierre and anyone else with even a hint of corruption around them) and throw themselves on the mercy of the court as the victims of executive abuse, OR circle the wagons around Wayne and keep circling right down the drain.

I stand by that observation. This Reorganization Plan was quite probably the last chance the Board had to make things right, and they blew it. Any serious reorganization plan would have started with the replacement of almost the entirety of senior staff, and an outline for the establishment of a new governing board, with a plan for doing that through member elections.

The main objective of the NRA Reorganization Plan at this point is to convince the bankruptcy judge that the organization is totally committed to preserving the Association, its assets, and its reputation, for the benefit of the members. The Board needed to convince Judge Hale that they’re serious about being totally transparent and above reproach in everything they do, and that they’re all prepared to fall on their collective swords for the benefit of the Association.

That’s certainly not the message being conveyed by the plan the Board approved and submitted.

After reading the NRA’s Reorganization Plan, I was convinced that the judge would only consider two options: Either throw the whole thing out OR appoint a Trustee. If a Trustee is appointed, there’s a very good chance (s)he will burn the place to the ground.

Last Thursday, the judge instructed the various attorneys to be prepared to answer a question of the proper role of the Bankruptcy Court, when they returned on Monday. The judge noted that the primary role of Chapter 11, is to prevent the dissolution of an entity through Chapter 7, then asked: “whether using Chapter 11 to avoid dissolution due to state laws and the actions of a state court, would be right and proper.”

Many have interpreted this question to translate to; “On Monday, tell me why I shouldn’t throw this case out on its keister.”

Attorneys from the NY AG and Ackerman McQueen, encouraged the judge to do just that, while attorneys for NRA begged him not to. David Dell’Aquila’s attorney encouraged the appointment of a Trustee, while Phil Journey’s attorney encouraged the appointment of an Examiner. Interestingly, the US Trustee’s office also seemed to be supportive of an Examiner. It appears that everyone – except NRA – opposed NRA’s idea of a Chief Restructuring Officer.

There’s no doubt that New York is systemically hostile toward NRA. The judge in the NY case sided with NRA in their suit against reimbursing former President Ollie North, but maybe he just really had a grudge against North and figured he’d have plenty of time to stick it to NRA. Who knows. What we do know is that the NY AG called NRA a terrorist organization, and their legislature actually changed laws to favor Governor Cuomo and the state over the NRA in another lawsuit, so definitely a hostile environment.

As I understand it, even if all of the reasons that the NRA filed for Chapter 11 are bogus, but the filing is actually beneficial to the Association or its members for other reasons, that’s enough “good faith” for the case to remain in the bankruptcy court.

I would argue that this is exactly the case here.

The problems within the NRA are all at the very top, not the organization itself, and certainly not the members. The reality in the NY dissolution suit is that, if the AG’s charges are true, the NRA and its members were victims of corrupt executives and an enabling, rubber-stamp Board, yet the AG wants to punish the members – and she is the one legally tasked with representing our interests in the case.

That’s the best argument as to why the bankruptcy should be allowed to move forward, and why it is critical that a Members’ Committee be formed to represent members’ interests in the case. I hope Judge Hale is seeing things this way.

All is not lost, but hope is dimming. If the judge dismisses the bankruptcy, the NY suit proceeds and Letitia James will be out for blood and the end of the NRA. If the judge keeps the case but appoints a Trustee, there’s a good chance of political interference possibly pushing the case from Chapter 11 to Chapter 7, and the dissolution of the Association.

Appointment of an Examiner seems to me to be the best hope, as the Examiner would report to the judge, leaving less room for political interference, but still be able to cut out the cancer and institute reasonable safeguards for the future.

The NRA definitely needs to be restructured, and that’s where a Members Committee could be extremely helpful. I’ve been thinking about what a new structure might look like, and plan to throw some ideas on the table in a future article – if it looks like the Association is going to survive long enough to make the reforms possible.

Stay tuned. We are at a critical juncture and NRA’s fate could be decided within a week.


About Jeff Knox:

Jeff Knox is a second-generation political activist and director of The Firearms Coalition. His father Neal Knox led many of the early gun rights battles for your right to keep and bear arms. Read Neal Knox – The Gun Rights War.

The Firearms Coalition is a loose-knit coalition of individual Second Amendment activists, clubs, and civil rights organizations. Founded by Neal Knox in 1984, the organization provides support to grassroots activists in the form of education, analysis of current issues, and a historical perspective of the gun rights movement. The Firearms Coalition has offices in Buckeye, Arizona, and Manassas, VA. Visit: www.FirearmsCoalition.org.

Jeff Knox
Jeff Knox
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3manfan
3manfan
5 months ago

Those thieves will never get another dime of my money.
So sad….yet another, once great organization, ruined by greed.

Bill
Bill
5 months ago

Until WLP and his theft-supporting cronies are gone ALL of my money goes to the GOA.
My wife and I have been an NRA Life members since 1990 and were annual members for 25 years before that!

Rowboat
Rowboat
5 months ago

The whole leadership of the NRA has done irreparable damage to the organization that will take decades, if ever, to overcome.
Meanwhile- La Pierre is STILL there. How dumb is that ?

nrringlee
nrringlee
5 months ago

We need to seriously consider the possibilities and implications of dissolution. In that case, where will the viable assets and resources of the organization land? We have many parallel 2A lobbying and litigation groups. That is not the problem. The problem lies in the public education and training arena. Can the NSSF pick up the ball, adopt that organization and adopt the thousands of instructors and coaches, validate and insure them and allow them to continue to train America? Frontsight, Gunsight and other proprietary options are not realistic for most Americans. Or do we just let it fade away. Our… Read more »

Considerthis
Considerthis
5 months ago
Reply to  nrringlee

I have wondered exactly what are the assets and how much does all this legal action endanger them ? What is the relationship between the NRA and the Smithsonian Institute regarding The National Firearms Collection ? Is part of it housed at Waples Mill ? Could a court decision demand the NRA surrender historical weapons in a settlement or even order their sale or destruction ?
If mismanagement at the NRA endangers The National Firearms Collection, then the leadership has not only let down it’s membership, but all Americans.

Charlie Foxtrot
Charlie Foxtrot
5 months ago
Reply to  nrringlee

The USCCA is already doing a good job in training and education, so good that the NRA wanted to copy the USCCA’s business model with NRA Carry Guard Training and Insurance and threw the USCCA out of the NRA Annual Meeting. That’s the same NRA Carry Guard Training and Insurance that Ackerman McQueen ran into the ground and caused the original lawsuits between the NRA and Ackerman McQueen. Those lawsuits created the opening for Brewer to suck millions out of the NRA and for the NY AG to go after the NRA. The NRA also raided its own training division… Read more »

Chev
Chev
5 months ago

Here we go again, yet another diatribe by Knox who believes either he, or his daddy should be/have been running the NRA. He’s whining because daddy wanted to run the show and had a falling out with the powers that be and left the NRA. Why give this putz a forum? All he is doing is stirring up hate and discontent in his lust for power and or revenge. We all know that the NRA is doing this to escape NY’s attempt to sue the NRA into oblivion, it’s not rocket science. North wanted to take over too and was… Read more »

Considerthis
Considerthis
5 months ago
Reply to  Chev

If Neal Knox and his supporters had been successful , the huge no bid contracts for the printing and mailing would have been eliminated and likely produced at lower costs, saving the organization and it’s membership lots of money that could have been routed to other means of protecting 2A rights. Maybe Jeff sees this as a great opportunity lost and a lesson to be learned, not a matter of hate,revenge or power lust. Jeff has had a seat on the B.O.D. himself, has he not ? There would be no way anyone could stir up hate and discontent if… Read more »

Arny
Arny
5 months ago
Reply to  Chev

Nobody is fighting for my second amendment. I will do that myself, when some fool is delusional enough in thinking they can take it. I don’t need to give money to a organization who believes they fight for my right. The delusional may take my life, but they won’t be taking my right. The only reason I belonged to the NRA was for the sole purpose that they taught gun safety for the youth. And sponsored events promoting 2A. Anyone believing they are fighting for your rights is just as delusional as the fool thinking he can take mine. It’s… Read more »

Cruiser
Cruiser
5 months ago

The main problem with the NRA is money, and we need board members
who want to be part of something bigger than themselves. The NRA has no room for self-serving egotists.
P.S. I have enough insurance, stop the junk mail. Try promoting something gun related.

JSNMGC
JSNMGC
5 months ago

They need:

  • New EVP/CEO
  • New CFO
  • New Chairman of the BOD
  • De-emphasis of lawyers in the running of the organization
  • Smaller/better board (with an outstanding audit committee)
  • Re-write of corporate governance
  • New approach to state organization
  • New strategy: stop promoting gun control laws, stop conceding, rapid & public down-grading of flip-flopping policians, put more effort on the front end (helping others to influence voters), cooperation with grassroot efforts, etc.

They are not going to do those things.

Charlie Foxtrot
Charlie Foxtrot
5 months ago

My bet, the judge dismisses the bankruptcy, as it was filed in bad faith (for all the given reasons).

Sisu
Sisu
5 months ago

@Charlie Foxtrot, The fact that “management” and the “board” were negligent in “controlling” Brewer does not make it a “bad faith” filing. NYS AG precipitated the filing because she is an “idiot, political whore”; the magnitude of the “monetary exposure” was likely “good cause” to file (regardless what a politically motivated court may find). … That said the tactic of changing domicile of entities is possibly questionable. … Regardless, the “board” should seize the opportunity and downsize, redirect, and most important assert control. … The NRA is not just dysfunctional, it is a “piggy bank”, “legitimacy”, “ego”, … a “club”… Read more »

Charlie Foxtrot
Charlie Foxtrot
5 months ago
Reply to  Sisu

You do not understand the bad faith argument at all. From https://nraindanger.wordpress.com/2021/05/04/summary-of-nras-position/: That brings up the whole issue of bad faith filing, which may lead to the bankruptcy case being thrown out. The judge posed a vital question, and nobody clearly answered it. The NRA protests that it is perfectly solvent (not true, as LaPierre admitted, every employee is still under a 20% salary cut). What is a financially secure corporation doing in bankruptcy? Is using the power of a bankruptcy court to escape a state enforcement action, not as incidental to resolving financial problems but as the whole purpose… Read more »

Sisu
Sisu
5 months ago

@Charlie Foxtrot, First, know I have some experience with these types of legal strategies; I am not an attorney. And, I admit I am not closely following the case; but I skimmed your linked article – it appears to be “personal opinion” without meaningful legal analysis. Nevertheless, in the interest of advancing readers’ understanding of what may be happening: Brewer and his team are knowledgeable and understand “risk analysis” in taking aggressive positions; one can disagree with an attorney’s advice but it does not follow that the attorney was frivolous or deliberately misleading (which participation in a “bad faith” finding… Read more »

Charlie Foxtrot
Charlie Foxtrot
5 months ago
Reply to  Sisu

As I said, you do not understand the bad faith argument at all. The judge dismissed the NRA’s bankruptcy case today, based on a bad faith filing. This was predictable, for those that actually followed the case.

NRA ‘Hail Mary’ Flops as Bankruptcy Dismissed
https://thereload.com/nra-bankruptcy-dismissed/

Knute
Knute
5 months ago

North was also the bagman, running the money from the then Vice-President George H.W. Bush, to the Iranians and the Contras back in the 1980’s. He took the fall for the scumbags above him, did his time in the federal pen, and was then rewarded with a run for Senator, which he lost as a convicted felon. So he then was rewarded with an anchor spot in the lamestream media, and finally the spot at the NRA. North is as well connected a gangster as could ever be one’s misfortune to meet. Little wonder he fit in so well at… Read more »

Charlie Foxtrot
Charlie Foxtrot
5 months ago

NRA President Oliver North had a side deal with NRA EVP Wayne LaPierre to do some NRA TV show, routing money through the NRA’s PR firm, Ackerman McQueen. That side deal fell apart when the NRA and Ackerman McQueen started to sue each other as part of the $100 million NRA Carry Guard Insurance and Training disaster. NRA President Oliver North then decided to align himself with Ackerman McQueen to oust Wayne LaPierre at the 2019 NRA Annual Meeting. Before being the NRA President, Oliver North was for years on the NRA’s Board of Directors and had no issues with… Read more »