(Reuters) – The National Rifle Association can not use bankruptcy to reorganize in pro-gun Texas, a federal judge in Dallas ruled on Tuesday and defeated the influential rights group facing an attempt to dissolve it in New York.
USA Bankruptcy Judge Harlin Hale's decision, following a trial over the legitimacy of the NRA's bankruptcy application in January, means that the group will remain incorporated in New York.
Last August, the New York Public Prosecutor's Office, Letitia James, had brought an action for the dissolution of the NRA, which she accused of corruption and misuse.
"The question facing the court is whether the existential threat to the NRA is the type of threat that the Bankruptcy Act is intended to protect against," Judge Hale wrote. "The court finds that it is not."
Judge Hale's dismissal is without prejudice, which means that the NRA can try again to file for bankruptcy, but the judge said that the problems identified in its activities could lead to a trustee being appointed to oversee
The NRA did not respond immediately on a request for comment.
Close in line with US Republican politicians, including former President Donald Trump, the NRA has been instrumental for years in opposing pro-democracy gun control proposals in the US Congress.
Attorney General James, a Democrat, has accused the NRA of diverting millions of dollars to fund luxury for officials, including longtime CEO Wayne LaPierre. She also accused it of awarding lucrative contracts to close employees and family members to senior officials.
Mr. LaPierre and the NRA have denied wrongdoing.
The NRA filed for Chapter 1
Attorney General James and the NRA's former advertising agency Ackerman McQueen has said the bankruptcy was filed in bad faith and to escape New York supervision, with a Attorney General's attorney James during closing arguments in the trial calling the bankruptcy a "circus sideshow." "
President Joe Biden's administration opposed the NRA in the trial. The Justice Department's bankruptcy watchdog, the U.S. trustee, urged Judge Hale to dismiss the bankruptcy.
The NRA has called the New York trial politically motivated. Mr LaPierre testified that he applied for Chapter 11 on behalf of the NRA because he feared that Justice Minister James would try to compensate it.
The NRA has also faced internal upheaval in recent years, including a failed attempt to reject Mr. LaPierre over allegations of mismanagement.
The NRA was founded in 1871 in New York. Texas is a Republican-led state whose leaders are friendly to the NRA's stance on gun control.
A series of mass shootings in the United States this year prompted President Biden in April to call gun violence "a national embarrassment." The Democratic president has taken some executive action on arms control and has called for broader steps that would require congressional passage, including a ban on military assault weapons and high-capacity ammunition magazines. Catalog