Federal judge tosses out NRA bankruptcy case
DALLAS — A federal judge Tuesday dismissed the National Rifle Association’s bankruptcy case, leaving the gun rights group to face a New York state lawsuit that accuses it of financial abuses and aims to put it out of business.
The case was over whether the NRA should be allowed to incorporate in Texas instead of New York, where the state is suing in an effort to disband the group.
Though headquartered in Virginia, the NRA was chartered as a nonprofit in New York in 1871 and is incorporated in the state.
Judge Harlin Hale said in a written order that he was dismissing the case because he found the bankruptcy was not filed in good faith.
“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.
His decision followed 11 days of testimony and arguments. Lawyers for New York 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.
“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,” the judge added.
LaPierre testified that he kept the bankruptcy secret to prevent leaks from the group’s 76-member board.