Texas judge mulls whether to dismiss NRA's bankruptcy petition

For nearly a month, attorneys have argued over whether the National Rifle Association’s petition to file for bankruptcy in Texas should be dismissed, and whether its business dealings should be overseen by a court-appointed trustee or an examiner.

The virtual trial in a North Texas bankruptcy court included testimony from top current and former NRA officials, including Chief Executive Officer Wayne LaPierre, who testified on April 7 that he had kept news of the impending bankruptcy filing from the NRA’s own general counsel, chief financial officer and other salaried NRA officials.
New York Attorney General Letitia Jamesoffice asked US Bankruptcy Judge Harlin Hale to dismiss the bankruptcy petition, saying it had been filed as a way toremove the NRA from regulatory oversight.
    Texas attorney Gerrit Pronske, who is representing Jamesoffice in court, argued during closing arguments on Monday that the bankruptcy filing should be dismissed for being filed inbad faith,” pointing to a public letter to NRA members on the day the organization filed for bankruptcy in which LaPierre wrote: “The NRA is not ‘bankruptor ‘going out of business.’ “
      We are as financially strong as we have been in years,” the letter signed by LaPierre read.
        Gregory Garman, an attorney for the NRA, argued Monday that the organization has $ 40 百万 “unfunded future litigation.But Pronske countered that financial statements showed the NRA hasplenty of cash on hand.
        I would submit, as a part of a good faith filing, you have to have some problems with your financial condition and you have to have debt issues either now or in the foreseeable future,” Pronske said. “The NRA does not have a debt problemit has a regulatory problem.
          詹姆士’ office has asked Hale to dismiss the bankruptcy case with prejudice, so that the NRA cannot refile for bankruptcy in another venue.

          ‘Exodus from New York

          The NRA’s headquarters is in Fairfax ,维吉尼亚州, but it’s been incorporated in the state of New York since shortly after the Civil War — 对于 150 年份.
          在一月, the NRA filed for bankruptcy and as part of its petition sought to be reincorporated in Texas, a move that came five months after James’ 办公室 filed a suit seeking to dissolve the organization.
          詹姆士’ 办公室 被指称 the organization violated New York laws governing nonprofits by routinely going around the organization’s internal controls to take part in spending that wasinappropriate and wasteful use of charitable assets.
          The suit alleges NRA leadership used millions from the group’s reserves to fund lavish trips on private jets, meals and other personal expenses and that money was diverted to benefit NRA insiders and favored vendors, that LaPierre handpicked associates tofacilitate his misuse of charitable assetsand that the NRA board did not follow an appropriate process to determinereasonablecompensation for NRA executives, including LaPierre.
          LaPierre testified during the 12-day-long bankruptcy trial that he currently makes $ 1.3 百万, after taking a 20% pay reductionvoluntarilywhen the organization had to make cuts to other employeessalaries last year.
          I think my compensation has always been reasonable,” LaPierre testified on Thursday.
          He also testified that he believes the NRAis in a much better place today.
          I think it’s stronger. I think the controls are stronger,” LaPierre testified. “I think the possibility of any overrides of controls are not gonna happen. The protections are in place. I feel very good about where we are.
          詹姆士’ office argued that if Hale does not dismiss the NRA’s bankruptcy petition, he should appoint a trustee to monitor the financial operations of the organization, 说 “there is evidence of fraud, dishonesty, incompetence and mismanagementby current leadership.
          Garman denied on Monday that the NRA’s bankruptcy filing was a strategy to avoid the New York attorney general’s litigation and pointed to a letter from New York Gov. Andrew Cuomo directing his administration to urge companies 至 “weigh reputational risksfor business ties with the NRA in 2018.
          This is the beginning of our exodus from New York,” Garman said Monday. “Because public policy permits us to be in a place where we can practice our First Amendment rights.

          Precedent-setting case

          If the NRA’s bankruptcy petition is approved it would set a “危险的” precedent by not allowing the New York attorney general’s case against the organization to go forward, said Brian Mason, an attorney arguing on behalf of the NRA’s largest creditor, advertising firm Ackerman McQueen.
          If this case is not dismissed, your honor, it’s going to throw a monkey wrench into the gears of federalism. It will throw gasoline on the ideological fires that are already raging out of control in this country,” Mason said.
            Pronske, who has practiced bankruptcy law for 38 年份, called the NRA’s filing theworst abuseof bankruptcy law he’s ever seen, and said that if the case is not dismissed it would be a court precedentinstruction bookleton how to file Chapter 11 “with complete impunity and with complete success.
            If this case is not dismissed, your honor, you would be telegraphing that if you don’t like what’s going on in your state court lawsuit, come on down to Dallas,” Pronske argued.




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