Texas Says No To NRA Bankruptcy

May 12, 2021

Saying the sole purpose for the NRA’s bankruptcy filing in Texas was “to gain an unfair litigation advantage” and “avoid a state regulatory scheme” Bankruptcy Judge Harlan “Cooter” Hale summarily tossed the National Rifle Association’s bankruptcy filing yesterday.

The rejection validates the assertions of current and former “dissident” NRA Board Members, the New York Attorney General’s office and the NRA’s former ad agency, Ackerman McQueen. Each group characterized the filing as being in “bad faith” with had no valid purpose other than to “take dissolution off the board” in the New York Attorney General’s case against the NRA and LaPierre.

It also wastes millions more in NRA member funds, adding to growing calls for reform at the nation’s oldest civil rights organization.

The immediate question, however, is whether or not it is already too-late for reform. Or what longtime NRA head LaPierre’s next step will be.

He is, after all, not prohibited from filing another bankruptcy petition. Refiling was not prohibited under Judge Hale’s ruling, but it was clear that should the NRA refile, “this court would immediately take up some of its concerns about disclosure, transparency, secrecy, conflicts of interest of officers and litigation counsel, and the unusual involvement in litigation counsel in the affairs of the NRA.”

What’s that mean? Essentially, if the NRA does refile, he would appoint a trustee to oversee the group.

That would effectively remove LaPierre and other managers from control of the organization.

In denying the bankruptcy, Judge Hale recognized the fact that New York Attorney General Letitia James’ action to dissolve the organization is no sure thing, writing “The Court is in no way saying it believes the NYAG can or cannot make the required showing to obtain dissolution of the NRA, but the Court is saying that the Bankruptcy Code does not provide sanctuary from this kind of a threat.”

As word of yesterday’s decision was announced, not many legal or gun rights observers following the case were surprised. Although few industry officials are publicly commenting, the few who have comment observed there was, ultimately, no good outcome to be expected.

“It was not unexpected,” said the Second Amendment Foundation’s Alan Gottlieb, “They might be lucky the judge did not take the case an appoint an outside receiver to run it.”

“There is,” he continued, “no good outcome from filing for bankruptcy. Only bad PR.”

At this point, one common question runs through all the conversations: “Is the NRA out of options?”

As I’ve been told, it depends on your viewpoint.

If you’re a staunch backer of Mr. LaPierre and the current Board of Directors, things aren’t looking good.

If, however, you’re part of the group that LaPierre, the NRA’s lawyers and the other members of the Board of Directors have called “dissidents” or “malcontents” you’re likely convinced all your efforts to avoid the worst-case scenario, a trial in New York, have been wasted.

Getting the bankruptcy dismissed may set the stage for a grim future in a New York courtroom.

Shortly after learning of Judge Hale’s decision, an angry Owen “Buz” Mills, a current, but very unhappy, Board Member told me, “I feel like the worst salesman ever. I tried to convince others on the board to do something - and failed. Now, Wayne LaPierre will be known as the guy who’s destroyed the NRA, all because he couldn’t keep his hands out of the cookie jar.”

“But,” he continued, “that still doesn’t let the Board of Director off the hook. We are to blame as well. We let him do this to us and America.”

This is a story that’s nowhere close to a conclusion.

It appears neither Wayne LaPierre nor the board members who doggedly support him are going anywhere.

The “dissident” current and former Board Members seem willing to continue to fight to change things, but seem to lack a clear path or strategy that would allow for the installation of new leadership.

At this point, the NRA seems destined for a New York courtroom where another legal loss has the potential to write the final chapter in the National Rifle Association’s 150-plus year history.

That, however, isn’t the only litigation ahead. The legal battle with former ally turned enemy Ackerman McQueen continues, as does the class action suit brought by angry members led by Nashville’s David Dell’Aquilla. It seeks a multi-million dollar judgement that would be returned to the membership.

Both will continue to consume resources that NRA members and supporters likely didn’t intend to be spent on attorneys.

Yesterday, Wayne LaPierre was quoted as saying he’s “disappointed with some aspects of the decision,” but it will not change the “overall direction” of the NRA or its programs.

“The NRA,” he said, “will keep fighting, as we have done for over 150 years.”

New York Attorney General Letitia James responded, tweeting: “No one is above the law… We sued the NRA to put an end to its fraud and abuse, and now we will continue our work to hold the organization accountable.”

But one question that caused industry leaders to close their wallets in a silent attempt to force changes at the NRA remains: was all this legal drama -and the tens of millions of dollars spent on it- really necessary?

Most admit- confidentially- they think not.

One industry leader isn’t keeping his feelings secret any longer.

Randy E Luth, President of Luth-AR, and founder of D.P.M.S./Panther Arms sent The Outdoor Wire this letter:

“Dear Friends and 2nd Amendment Supporters:

Wayne LaPierre- Go Away!

After watching this train wreck over the last 2 years, it is time for the firearms industry to assist in removing Wayne LaPierre from our beloved NRA.

As the bankruptcy proceedings have confirmed, there is a direct lack of leadership at the Executive level as well as the lackluster Board of Directors.

The members of the NRA donate hard-earned money to support the strongest amendment in the Bill of Rights, that would be the 2nd Amendment, not the 1st. When the NRA executives are living like Kings and Queens at the expense of working members, it is long past the time for removal or retirement of the Royalty.

Just think to the lobbying efforts and Pro-gun efforts that could have been initiated if LaPierre and his sidekicks had not caused the many lawsuits and distress within the NRA. It appears the NRA has paid attorneys close to $100,000,000 on the many lawsuits in the last few years. How can any nonprofit organization be involved in that many lawsuits?

It has become obvious the LaPierre will not step down, so it is time to help him make that decision. I propose that the firearms industry and the members boycott the upcoming annual convention/meeting in Houston over the Labor Day weekend. Exhibitors can boycott by either not attending or not setting up a booth. Members can boycott simply by not attending at all.

This proactive protest will send a strong message and may help LaPierre and his followers to pack their bags and depart. This is the only way to save the NRA, we need new Leadership and new ideas. How can there be 100,000,000-gun owners in America and less than 5 million members? I believe the reason is lack of leadership and marketing.

As a Lifetime member of the NRA and a member of the Hunters Leadership Forum, I have suspended all gifting legacy donations as well as HLF donations, in the meantime, I have donated similar dollars to other pro-gun organizations to help fight the fight.

Once new leadership is installed, I will reinstate my donations and support for the NRA, as I have done for 4 decades.

We need the NRA, but we need new Executive leadership and Board of Directors.

I ask that you stand with me. We CAN and WILL be heard loud and clear. We can right this sinking ship. Begin the Boycott!

-Randy E. Luth

What’s ahead? My crystal ball’s not offering any answers on that.

But it doesn’t take a psychic hotline call to know that a winner-take-all fight for control of the National Rifle Association has ratcheted up yet another notch.

Another issue in question is larger than who will ultimately gets control. The bigger question is whether an organization already tarnished by admitted wrongdoing by its leadership can survive to be reformed.

As always, we’ll keep you posted.

— Jim Shepherd