On May 11, Judge Harlin D. Hale of the U.S. Bankruptcy Court for the Northern District of Texas dismissed the National Rifle Association’s bankruptcy petition. The gun-rights group had filed for bankruptcy in that court to defend itself from attempts by N.Y. Attorney General Letitia James to have the organization legally disbanded. James’ case was based on her authority to regulate New York charities and non-profits, and the NRA had been incorporated in New York in 1871.
The NRA has plenty of money, although that is unlikely to stop its robust and vigorous fundraising by mail. The reason for the NRA’s bankruptcy declaration had nothing to do with its ability to cover its costs. Instead, it filed to protect the organization from a potential attack by James. She filed a petition in New York that claimed the NRA was so hopelessly mismanaged, the state must, out ensure good practice, disband it.
When You’ve Lost The Big Box Media…
To give some insight into James’ radical position to demand that a court dissolve the NRA, a prominent Washington newspaper took issue with her scorched earth plan. Their editorial said, “Forcing its dissolution has disturbing implications — made even more disturbing by the fact that the attorney general seeking that step is a Democrat who vowed during her campaign to ‘take on the NRA’ and labeled it a ‘terrorist organization.’ In this country, we don’t go after entities because of what they advocate.”
Judge Hale ruled that the NRA’s petition was filed for the purpose of protecting it against being disbanded under state law. His 38-page order concluded, “The Court agrees with the NYAG that the NRA is using this bankruptcy case to address a regulatory enforcement problem, not a financial one.” His ruling allows for the NRA to refile its petition, but it came with a warning from the judge who said:
“[S]hould the NRA file a new bankruptcy case, this Court would immediately take up some of its concerns about disclosure, transparency, secrecy, conflicts of interest of officers and litigation counsel, and the unusual involvement of litigation counsel in the affairs of the NRA.”
Filed in federal court, a bankruptcy petition acts as a trump card, no pun intended, on pending state and local court action. By running to federal court, the NRA hoped to cut Letitia James out entirely. They wished to leave the bankruptcy courts reborn as a Texas corporation, which would no longer be susceptible to James’ quest to see the group shut down.
Problems on Waples Mill Road
Judge Hale’s ruling included some shocking facts about the NRA’s bankruptcy filing, all of it indicative of existential dysfunction at the nation’s oldest civil rights organization. Neither the NRA’s General Counsel nor the NRA’s treasurer and then-CFO was even informed about the bankruptcy filing before it was made. The organization has not commented on whether or when it might refile a bankruptcy petition. This represents another setback for the NRA, which is battling the new President’s aggressive gun-control agenda while it fights for its very existence.
Read more from Scott D. Cosenza.