Court denies NRA bankruptcy request, delivers blow to group’s Texas relocation plan

Thomas Catenacci, DCNF

  • A federal bankruptcy court dismissed the National Rifle Association’s bankruptcy filing, which the group filed as a means to relocate from New York to Texas.
  • “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,” Judge Harlin Hale wrote in his ruling.
  • “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,” NRA CEO Wayne LaPierre told the Daily Caller News Foundation in a statement.

A federal bankruptcy court dismissed the National Rifle Association’s bankruptcy filing, which the group filed as a means to relocate from New York to Texas.

Northern District of Texas Bankruptcy Court Judge Harlin Hale ruled that the National Rifle Association (NRA) doesn’t currently face an “existential threat” as outlined in U.S. bankruptcy law by remaining in New York, according to his ruling published on Tuesday afternoon.

“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,” Hale wrote.

The NRA originally filed for Chapter 11 bankruptcy on Jan. 15, but said that it was in great financial condition. The Second Amendment advocacy group insisted it filed for bankruptcy solely to escape New York and establish itself in Texas.

NRA CEO Wayne LaPierre said that the group, which has $50 million in net assets, believed New York had become a “toxic, politicized, weaponized” environment. Throughout the trial, NRA lawyers have consistently presented the filing as a way to depart New York.

In August, New York Attorney General Letitia James filed a lawsuit against the NRA seeking to completely dissolve the group over fraud allegations. The lawsuit is the culmination of a tense relationship between the massive gun rights group and the state, which has previously targeted the NRA’s bottom line.

Allowing the NRA to relocate to Texas would deprive the State of New York of the ability to enforce its laws regulating not-for-profit corporations, Hale said in his ruling Tuesday. While it is true the state’s lawsuit could lead to dissolution of the NRA, Hale said that would only occur if the group was found to have violated the law.

Hale noted that there were other avenues at the NRA’s disposal if it wanted to simply move to Texas and characterized the bankruptcy filing as “unusual.”

“The NRA remains committed to its members and our plan for the future,” LaPierre told the Daily Caller News Foundation in a statement following the ruling Tuesday. “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,” he continued. “The NRA will keep fighting, as we’ve done for 150 years.”

The NRA vowed to continue to defend itself in ongoing litigation in a statement shared with the DCNF. It also didn’t rule out using other legal means to relocate to Texas.

“The NRA can still pursue establishing business operations in Texas, and the organization will continue to explore moving its headquarters there from Virginia,” the group said. “Texas is home to more than 400,000 NRA members.”

Bankruptcy experts had criticized the NRA’s filing as an unorthodox, potentially bad faith move in January.

“I don’t think this would have been my first option or my second option or my third option,” Jeremy Fischer, co-chair of the American Bankruptcy Institute’s Bankruptcy Litigation Committee, told the Daily Caller News Foundation in January. “I don’t know that bankruptcy is a great fit for what they’re trying to do. I think it would be an option of last resort.”

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