An attorney for New York attorney general Letitia James argued a United States bankruptcy judge should turn down Chapter 11 filing of the National Rifle Association to keep bankruptcy from becoming a haven for evildoers.
The National Rifle Association’s bankruptcy filing was part of a bold attempt to evade legitimate oversight in the NRA’s home state, New York, and should be dismissed, a state attorney said during the closing down of a lawsuit on Monday.
The January Chapter 11 filing of the NRA is a “flagship of bankruptcy filed in bad faith,” and the court should reject it in order to “prevent bankruptcy from becoming a haven for malefactors,” Gerrit Pronske, Attorney for New York Attorney General Letitia James argued.
U.S. bankruptcy judge Harlin Hale is conducting a lawsuit in Dallas to deny the NRA filing, appoint a trustee to lead the group during bankruptcy, or appoint an investigator to deal with James’ allegations of corruption and investigated mismanagement in their top echelons.
According to New York, filing for bankruptcy is unlawful for a number of reasons.
These include filing motions to gain advantage in a separate fraud lawsuit against the NRA in New York, a lack of financial coercion to justify a Chapter 11 case, an offer to find a personable location, and an internal trial at where the management of the NRA is in breach of its own governance requirements, “deliberately deceiving” its board by keeping it in the dark about its bankruptcy plans.
“DUMPING” New York
The NRA never hid its desire to get out of bankruptcy without living in New York for 150 years and with a new charter in Texas, Pronske told the court.
On the day it requested the restructuring, it posted a letter on its website announcing that it was “DUMPING” the state. As further evidence, Pronske noted that the NRA had formed a partnership called Sea Girt LLC to reincorporate into Texas, which he compared to “Decoy Duck LLC”.
He directed some of his toughest comments to Wayne LaPierre, longtime head of the NRA, saying he would accept lavish travel from an NRA provider without properly disclosing it and retaliate against anyone who objected.
That included Craig Spray, Pronske’s chief financial officer, whose efforts to impose financial controls were overridden by a “Wayne Says” rule.
Brian Mason, attorney for the NRA’s former advertising agency, Ackerman McQueen Inc., also spoke out in favor of dismissing the case.
Mason argued that there is “an overwhelming amount of evidence” that the NRA is financially sound, including the fact that it had $ 72 million in cash on hand.
“It is an undisputed fact that the NRA’s financial condition had nothing to do with the filing of this bankruptcy,” Mason said.
Mason told the court that the bankruptcy was fraudulently filed without the NRA’s bylaws approving full pension. He said the board changed LaPierre’s employment contract in early January, shortly before filing, in an ambiguous way that allowed him to deceive him into claiming he had authority to initiate the process.
He said LaPierre testified that the board should have figured out the meaning of his employment contract that gave him that authority.
The case is the National Rifle Association of America, 21-bk-30085, US Bankruptcy Court, Northern District of Texas (Dallas).