A Texas judge dismissed the National Rifle Association's Chapter 11 bankruptcy petition on Tuesday, dealing a major setback to the gun rights group amid an ongoing legal fight in its home state of NY.
U.S. Bankruptcy Judge Harlin Hale's decision, following a trial over the legitimacy of the NRA's January bankruptcy filing, means the group will remain incorporated in NY. "The Court finds that the NRA did not file the bankruptcy petition in good faith because this filing was not for a goal intended or sanctioned by the Bankruptcy Code".
The NRA declared bankruptcy in January, five months after James' office sued seeking its dissolution following allegations that executives illegally diverted tens of millions of dollars for lavish personal trips, no-show contracts and other questionable expenditures.
Closely aligned with Republicans including former President Donald Trump, the NRA has always been instrumental in thwarting Democratic-backed gun control measures in the U.S. Congress.
Hale also alluded to Wayne LaPierre's admission of putting the NRA in bankruptcy proceedings without notifying numerous group's board members and/or top officers. "The court believes it is not".
Stephen Gutowski, firearms reporter and founder of TheReload wrote after the the bankruptcy dismissal, "The complete and total shutdown of the NRA is now more likely than ever".
LaPierre and the NRA have denied wrongdoing.
James and the NRA's former advertising agency Ackerman McQueen have said the bankruptcy was filed in bad faith and to escape New York's oversight, with a lawyer for James during closing arguments of the trial calling the bankruptcy a "circus sideshow". "No one is above the law, not even one of the most powerful lobbying organizations in the country".
The NRA filed for Chapter 11 bankruptcy in January, explaining in a news release that its aim was to "restructure the Association as a Texas nonprofit to exit what it believes is a corrupt political and regulatory environment in NY".
The NRA filed for Chapter 11 protection in January with the goal of reincorporating in Texas and escaping what it called a corrupt political and regulatory environment in NY.
He said that made bankruptcy preferable, though the group could fully pay its debts if the Chapter 11 case were dismissed.
"The NRA was forced to hang its dirty laundry out for the world to see", said John Feinblatt, president of Everytown for Gun Safety, which supports stricter gun control laws. "Their loss is a huge gain for the gun safety movement".
A spate of mass shootings in the United States this year prompted Biden in April to call gun violence "a national embarrassment".
The case was over whether the NRA should be allowed to incorporate in Texas instead of NY, where the state is suing in an effort to disband the group.