[co-author: Alex Xiao]
Executive Summary
In May, 2021, Judge Harlin D. Hale of the United State Bankruptcy Court for the Northern District of Texas, dismissed the chapter 11 cases filed by the National Rifle Association. The court found that the organization filed bankruptcy to gain an unfair litigation advantage and avoid a state regulatory action brought by the New York Attorney General, which is not a valid bankruptcy purpose. This high-profile case demonstrates that although the bar is not high for an organization to procure protection from creditors under the U.S. Bankruptcy Code, a barrier of entry does stand.
In re National Rifle Association of America and Sea Girt, LLC, No. 21-30085 (Bankr. N.D. Tex. May 11, 2021).
Northern District of Texas Bankruptcy Court Dismisses NRA Bankruptcy Cases | Kramer Levin Naftalis & Frankel LLP jdsupra.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from jdsupra.com Daily Mail and Mail on Sunday newspapers.
NRA loses in court in effort to relocate to more gun-friendly Texas May 11, 2021, 4:15 pm An NRA convention in 2013. The head of the group is accused of spending millions on personal indulgences.
Photo by Shannon Stapleton/Reuters An attempt by the head of the National Rifle Association to wriggle out of a lawsuit one that could put an end to the organization itself has been rebuffed by a bankruptcy judge in Dallas. NRA head Wayne LaPierre filed for bankruptcy protection after the NRA was sued by the New York Attorney General s office for fraud and abuse. The lawsuit accuses the NRA of misusing charitable funds to the tune of millions of dollars.
The National Rifle Association, long a feared power broker, will learn its fate next week in a court ruling that could hobble the gun rights group and imperil the three-decade reign of its controversial boss, Wayne LaPierre.
The judge is weighing several options. He could let the NRAâs bankruptcy case go forward, giving the group a measure of refuge from a New York lawsuit that threatens its assets and even its existence. He could put the group under the control of a trustee, empowered to make decisions about its finances and its future. Or, in a highly unusual move, he could throw the NRA out of bankruptcy court altogether.
The National Rifle Association, long a feared power broker, will learn its fate next week in a court ruling that could hobble the gun rights group and imperil the three-decade reign of its controversial boss, Wayne LaPierre.
The judge is weighing several options. He could let the NRAâs bankruptcy case go forward, giving the group a measure of refuge from a New York lawsuit that threatens its assets and even its existence. He could put the group under the control of a trustee, empowered to make decisions about its finances and its future. Or, in a highly unusual move, he could throw the NRA out of bankruptcy court altogether.