In May, a federal bankruptcy judge of Dallas, Harlin Hale, dismissed the chapter 11 filing of the NRA without prejudice — meaning the nonprofit organization can refile at a later date. The decision blocked the group from incorporating into taxes, postponing the current New York lawsuit, and potentially stifling the hopes of getting out from under impending financial scrutiny and collapse.
According to Judge Hale’s ruling, NRA leadership sought bankruptcy protections in bad faith in an attempt to achieve an “unfair advantage” in the developing case with regulators in New York. The primary regulator being addressed is the New York Attorney General Letitia James.
A Brief History of the Current NRA Legal Troubles
In August 2020, James’ filed a lawsuit seeking the organization’s dissolution, alleging leadership within the group diverted nonprofit funds to pay for personal trips, no-show contracts, and other questionable expenditures. The final alleged tally of this misappropriation of funds is in the tens of millions. Along with the chief executive officer, Wayne LaPierre, the suit names three other individuals. In response to the original lawsuit, the NRA sued James’, alleging the Attorney General is motivated by politics.
Why File Bankruptcy?
The NRA is facing multiple lawsuits and court battles. According to an NRA lawyer, the nonprofit sought bankruptcy as a last-ditch effort to salvage the business. In addition to James’ suit, the company is also dealing with lawsuits from Attorney General Karl Racine of Washington D.C. and its former advertising agency.
Filing for bankruptcy protection in Texas was an attempt to move litigation to a more favorable state, and this is not up for debate. In January, the NRA made it clear the filing was an attempt to escape the regulatory oversight in New York, where it received its nonprofit charter in 1871, and where James has regulatory power over incorporated nonprofits.
The Future of the NRA
For now, the NRA is still kicking and readying itself for its day in court. According to the current leadership, the plan is still to move to Texas, a more favorable state with powerful allies. However, James has no interest in making the organization’s transition easy. According to her, she has the authority to block any efforts by the NRA to abandon its incorporation.
Despite the loaded back-and-forth dialogue, the NRA will probably avoid another bankruptcy filing because of Judge Hale’s staunch warning about looking further into NRA lawyers’ “unusual involvement” in the group’s affairs. Still, that doesn’t mean the nonprofit will abandon the idea of incorporating in Texas.
If the group does decide to continue its pursuit in a last-ditch effort to avoid prosecution in the more liberal-leaning New York, the Texas Governor, Greg Abbott, and Attorney General, Ken Paxton, seem favorable to the move. However, each political figure has remained radio silent outside of a couple of Twitter posts.
When the future of the NRA is uncertain at the moment, people need to realize that the undoing of this once nonprofit juggernaut will not resolve the gun debate or end gun violence. The NRA is only an organization, and if they fail, another will likely pick up the pieces and step in to fill the void, hopefully with less drama and less corruption among the leadership.
What do you think of the current NRA fiasco? Leave a comment below and keep the conversation going.