Credit & Capital

NRA Files Chapter 11 Amid Legal Battle With NY

Legal experts said the gun-rights group was likely maneuvering to thwart a suit in which New York State accuses its leaders of fraud.
Matthew HellerJanuary 19, 2021

The National Rifle Association has filed for bankruptcy in what legal experts said was a move to thwart a New York State lawsuit accusing it of fraud.

The NRA said the Chapter 11 filing would facilitate its plan to relocate to Texas from New York, where it has been incorporated since it was founded in 1871. The gun-rights group filed the petition in Dallas bankruptcy court.

“The NRA is pursuing reincorporating in a state that values the contributions of the NRA, celebrates our law-abiding members, and will join us as a partner in upholding constitutional freedom,” NRA CEO Wayne LaPierre said in a news release.

But according to the Texas Tribune, bankruptcy experts believe “the NRA’s filing is less of a physical relocation and more of a legal play to avoid a potentially disastrous case in New York.”

In the New York case, which was filed in August, state Attorney General Letitia James alleges NRA executives used the organization as a “personal piggy bank” by illegally diverting $64 million into their own pockets.

The Chapter 11 petition could mean the suit will now be litigated in the Texas bankruptcy court. “They probably figured they’d have a more friendly judge in Texas,” said Josh Wolfshohl, a bankruptcy attorney at Porter Hedges LLP in Houston.

“They’re trying to do a preemptive strike” against New York, said Sidney Scheinberg, a bankruptcy attorney at Godwin Bowman PC in Dallas. “It’s a clever maneuver. Whether it’s going to work, I don’t know.”

The NRA listed between $100 million and $500 million in liabilities and assets within the same range in the bankruptcy filing.

“The NRA is not insolvent,” the group said. “This action is necessitated primarily by one thing: the unhinged and political attack against the NRA by the New York Attorney General.”

Responding to the bankruptcy, James said, “The NRA’s claimed financial status has finally met its moral status: bankrupt,” while Rebecca Fischer, executive director of New Yorkers Against Gun Violence, said its “alleged ‘strategic plan’ to flee New York and our strong, sensible laws is only further proof of their legal culpability.”

(Photo by Justin Sullivan/Getty Images)