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[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). ....
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To embed, copy and paste the code into your website or blog: Judge Harlin D. Hale of the United State Bankruptcy Court for the Northern District of Texas dismissed the chapter 11 bankruptcy case filed by the National Rifle Association (the “NRA”) for cause, finding that the case was not filed in good faith. 1 In its 38-page opinion issued in connection with multiple motions to dismiss and a motion to appoint an examiner (and after 12 days of trial testimony from 23 witnesses) the Court found that there was cause to dismiss the case because “the NRA’s bankruptcy petition was not filed in good faith but instead was filed as an effort to gain an unfair litigation advantage” in a dissolution action brought by the State of New York “and as an effort to avoid a regulatory scheme.” ....