U.S. Bankruptcy Judge Harlin Hale's decision means the NRA cannot escape oversight New York state — at least for now.
Published: 2021-05-11 04:56 pm
NRA wrong to file for bankruptcy, Texas judge rules

A federal judge in Texas ruled Tuesday that the National Rifle Association cannot file for bankruptcy, a decision that calls into question the gun-rights group's plan to relocate its headquarters to escape oversight by New York regulators. 

Judge Harlin Hale's decision comes almost 10 months after New York Attorney General Letitia James filed a lawsuit against the NRA, accusing four of the organization's top executives of mismanaging funds and violating state and federal laws. 

"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," James tweeted Tuesday after the ruling. 

In January, the NRA filed for Chapter 11 bankruptcy protection from its debts, declaring its intent to reorganize and relocate to Texas. The NRA is based in Virginia but has long been chartered as a nonprofit organization in New York state.

"Although we are disappointed in some aspects of the decision, there is no change in the overall direction of our association, its programs or its Second Amendment advocacy," LaPierre said in a statement after Hale's ruling. 

"We remain an independent organization that can chart its own course, even as we remain in New York to confront our adversaries," he added.

Hale suggested in his ruling he didn't believe the NRA had filed for bankruptcy solely for financial purposes. "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," he wrote. "The court believes it is not."

Hale's ruling also comes one week after the U.S. Department of Justice publicly objected to the NRA's bankruptcy plan. The Justice Department has also accused the NRA of mismanaging funds. 

The judge's ruling comes as a surprise to some bankruptcy experts, who previously told CBS MoneyWatch they expected Hale to appoint an examiner to study the NRA's finances. Hale's ruling is without prejudice, a legal term of art that means the NRA can attempt to file for bankruptcy again if the group wishes. 

The NRA did not immediately respond to requests for comment Tuesday. 

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