US Judge Dismisses NRA Bankruptcy Case Over Attempt to Avoid Civil Lawsuit

Texas judge dismisses NRA Chapter 11 bankruptcy petition

Judge dismisses NRA bankruptcy case in blow to the gun group

A federal judge in Dallas ruled on Tuesday that the National Rifle Association can not use bankruptcy to reorganize in gun-friendly Texas, a serious blow to the gun rights group's effort to avoid a lawsuit in NY seeking its dissolution.

"The Court agrees with the NYAG [New York Attorney General] that the NRA is using this bankruptcy case to address a regulatory enforcement problem, not a financial one", US Judge Harlin Hale wrote in the order.

Gregory Garman, an attorney for the NRA, argued last week that the organization has $40 million in "unfunded future litigation".

Closely aligned with Republicans including former President Donald Trump, the NRA has always been instrumental in thwarting Democratic-backed gun control measures in the U.S. Congress.

Hale ruled after a 12-day trial, which ended on May 3.

It declared bankruptcy in January.

"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.

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In a statement, LaPierre acknowledged defeat and appeared resigned to defending against James' lawsuit. "Brady reiterates its support for New York Attorney General Letitia James, who has prudently sought to hold the NRA fully accountable for its malfeasance and corruption".

"We are as financially strong as we have been in years", the letter signed by LaPierre read.

Phillip Journey, an NRA board member and Kansas judge who had sought to have an examiner appointed to investigate the group's leadership, was concise about Hale's judgment: "1 word, disappointed", he wrote in a text message.

Hale agreed with James' office's argument in his ruling issued Tuesday. James added that "we will now refocus on and continue our case in NY court". "No one is above the law, not even one of the most powerful lobbying organizations in the country".

Shannon Watts, who founded Moms Demand Action for Gun Sense in America, said in a series of tweets that the bankruptcy dismissal "comes at the worst possible time for the NRA: right as background checks are being debated in the Senate".

The NRA had filed for Chapter 11 in January, with a goal of reincorporating in Texas and escaping what it called a corrupt political and regulatory environment in NY, where the group was founded in 1871.

LaPierre testified during the 12-day bankruptcy trial that he now makes $1.3 million after taking a 20% pay reduction "voluntarily" when the organization had to make cuts to other employees' salaries a year ago.

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Hale dismissed the NRA's case without prejudice, meaning the group can refile it.

The NRA also has faced internal upheaval in recent years including a failed effort to oust LaPierre over allegations of mismanagement.

The NRA is not above the law.

"I think the question is, despite those self-inflicted wounds and despite the fact that they're in some ways a shadow of their former self, can they continue to exert influence and try and keep the opponents of even the most modest reforms to increase gun safety toeing the line?" he said.

President Joe Biden's administration opposed the NRA in the trial.

Biden has called gun violence "a national embarrassment" following a spate of mass shootings, and called for Congress to ban military-style assault weapons and large-capacity magazines.

James' office alleged the organization violated NY laws governing nonprofits by routinely going around the organization's internal controls to take part in spending that was "inappropriate and wasteful use of charitable assets".

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