From today's WSJ:
A Dallas judge has thrown the National Rifle Association out of bankruptcy court, calling into question the gun rights group’s planned relocation to Texas as it faces allegations of spending abuses and mismanagement in its home state of New York.
Judge Harlin Hale of the U.S. Bankruptcy Court in Dallas dismissed the NRA’s chapter 11 case, ruling that NRA CEO Wayne LaPierre filed the January bankruptcy “to gain an unfair litigation advantage” and “to avoid a state regulatory scheme.”
Tuesday’s ruling validates arguments by New York Attorney General Letitia James and the NRA’s former ad agency, Ackerman McQueen Inc., that the bankruptcy was filed in bad faith and didn’t have a valid purpose.
Ms. James sued to dissolve the NRA in August, accusing Mr. LaPierre and other executives of corruption and financial mismanagement, which Mr. LaPierre and the NRA have denied. The New York lawsuit has continued while the NRA has been in chapter 11. Ms. James has oversight of the NRA, which is headquartered in Virginia but was founded in New York in 1871 and is officially domiciled there.
The NRA said when it filed bankruptcy that it was doing so to “to exit what it believes is a corrupt political and regulatory environment in New York.” The NRA said it intended to use bankruptcy to reincorporate in the friendlier jurisdiction of Texas.
Judge Hale’s dismissal of the NRA’s chapter 11 case, which has cost the organization millions of dollars in legal fees, puts in jeopardy the group’s strategy to battle the New York attorney general lawsuit and litigation with its former ad agency.
In dismissing the case, Judge Hale didn’t prohibit the NRA from filing for bankruptcy a second time. But he said if the NRA did refile, he likely would appoint a trustee to oversee the group, which would essentially strip Mr. LaPierre and other managers of control.
A Dallas judge has thrown the National Rifle Association out of bankruptcy court, calling into question the gun rights group’s planned relocation to Texas as it faces allegations of spending abuses and mismanagement in its home state of New York.
Judge Harlin Hale of the U.S. Bankruptcy Court in Dallas dismissed the NRA’s chapter 11 case, ruling that NRA CEO Wayne LaPierre filed the January bankruptcy “to gain an unfair litigation advantage” and “to avoid a state regulatory scheme.”
Tuesday’s ruling validates arguments by New York Attorney General Letitia James and the NRA’s former ad agency, Ackerman McQueen Inc., that the bankruptcy was filed in bad faith and didn’t have a valid purpose.
Ms. James sued to dissolve the NRA in August, accusing Mr. LaPierre and other executives of corruption and financial mismanagement, which Mr. LaPierre and the NRA have denied. The New York lawsuit has continued while the NRA has been in chapter 11. Ms. James has oversight of the NRA, which is headquartered in Virginia but was founded in New York in 1871 and is officially domiciled there.
The NRA said when it filed bankruptcy that it was doing so to “to exit what it believes is a corrupt political and regulatory environment in New York.” The NRA said it intended to use bankruptcy to reincorporate in the friendlier jurisdiction of Texas.
Judge Hale’s dismissal of the NRA’s chapter 11 case, which has cost the organization millions of dollars in legal fees, puts in jeopardy the group’s strategy to battle the New York attorney general lawsuit and litigation with its former ad agency.
In dismissing the case, Judge Hale didn’t prohibit the NRA from filing for bankruptcy a second time. But he said if the NRA did refile, he likely would appoint a trustee to oversee the group, which would essentially strip Mr. LaPierre and other managers of control.
