A Texas judge tossed out the National Rifle Association’s Chapter 11 bankruptcy petition on Tuesday, allowing a lawsuit brought against the group by the New York attorney general to move forward.
U.S. Bankruptcy Judge Harlin Hale said the NRA “did not file the bankruptcy petition in good faith,” arguing that the filing was made in an effort to avoid the lawsuit by state attorney general Letitia James’ office. The suit aims to dissolve the group over allegations of financial impropriety.
“The question the court is faced with is whether the existential threat facing the NRA is the type of threat that the Bankruptcy Code is meant to protect against,” Hale wrote. “The court believes it is not.”
James’ suit claims that top NRA officials, including Executive Vice President Wayne LaPierre, directed millions of dollars from the organization for personal use and unlawfully granted contracts to friends and associates.
The organization has denied the allegations and claimed that the suit is politically motivated.
The state attorney general’s office and attorneys for the NRA’s former advertising agency, Ackerman McQueen, had requested that the court toss out the Chapter 11 case, claiming that the petition was filed in order to avoid the dissolution case in New York.
James celebrated the ruling in a tweet on Tuesday.
“A judge has ruled in our favor and rejected the @NRA’s attempt to claim bankruptcy and reorganize in Texas,” she wrote. “The @NRA does not get to dictate if and where it will answer for its actions, and our case will continue in New York court. No one is above the law.”
The @NRA does not get to dictate if and where it will answer for its actions, and our case will continue in New York court.
No one is above the law.
— NY AG James (@NewYorkStateAG) May 11, 2021
The organization is headquartered in Virginia but incorporated in New York. The NRA filed for bankruptcy last January, hoping to leave New York and reincorporate in Texas over what it called a “corrupt political and regulatory environment” in the Big Apple.
While the judge’s ruling does not prevent the NRA from filing for bankruptcy again, the court warned that a second filing could cause a trustee to be appointed to oversee the organization.