Thursday, January 21, 2021
The January 15, 2021 bankruptcy petition filed by the National Rifle Association of America (NRA) in the Northern District of Texas poses important tests of the rules for determining proper venue in a bankruptcy case and the standard for determining whether a bankruptcy petition has been filed in good faith.
By filing in Texas, the NRA, a New York entity with its principal place of business in Virginia, is relying on the fact that its subsidiary Sea Girt LLC was formed under Texas’ limited liability company law. Typically, a company may file for bankruptcy in any venue that would be available to any one of its affiliates, and the NRA is relying on its Sea Girt affiliate’s presence in Texas in this case. But the complicating factor for the NRA’s choice of venue is that Sea Girt does not appear to have been formed until November 24, 2020
Wrapping the Christmas Risk
Supply-chain credit risk is a continuous risk vendors and suppliers face, and it is a risk that has some extra venom during the holiday season. With a
highly distressed retail sector, suppliers are, as always, seeking to offset their exposure to troubled retailers should the retailers fail before paying for their merchandise. To address this risk, suppliers often enter into
vendor puts, offloading the nonpayment risk to a bank or, increasingly, an
investment fund. Of course, financial institutions taking this non-payment risk are not drinking the eggnog and gambling on the retailers performing. Instead, investors in vendor puts typically