National Rifle Association files for bankruptcy, seeking to escape New York lawsuit

[January 16, 2021]  By Jan Wolfe and Jonathan Stempel

(Reuters) - The National Rifle Association on Friday filed for bankruptcy, a sudden development that could help the gun rights group escape a lawsuit by New York's attorney general seeking its dissolution.

The NRA filed for Chapter 11 protection in federal bankruptcy court in Dallas, and said it plans to reincorporate in Texas to escape "a corrupt political and regulatory environment" in New York, where it is now incorporated.

"Texas values the contributions of the NRA, celebrates our law-abiding members, and joins us as a partner in upholding constitutional freedom," Chief Executive Wayne LaPierre said in a letter to members. "We seek protection from New York officials who illegally abused and weaponized the powers they wield against the NRA and its members."

The NRA was sued in August by New York Attorney General Letitia James, who accused LaPierre and other senior leaders of self-dealing and mismanagement, and said the group's activities violated state laws governing nonprofits.

James said NRA officials diverted millions of dollars to fund luxury lifestyles, including vacations and private jets, and to buy the silence and loyalty of former employees, costing the group $64 million over three years.

"The NRA's claimed financial status has finally met its moral status: bankrupt," James said in a statement on Friday. "We will not allow the NRA to use this or any other tactic to evade accountability and my office's oversight."

In its own statement, the NRA pledged no immediate changes to its operations or workforce and said it was not insolvent, with LaPierre adding that it was "as financially strong as we have been in years."

A general view shows the National Rifle Association (NRA) headquarters, in Fairfax, Virginia, U.S., August 6, 2020. REUTERS/Jonathan Ernst/File Photo

The group said it would continue to defend its members' constitutional rights under the Second Amendment, which guarantees the right to keep and bear arms.

Critics say the NRA is an enabler of gun violence.

In her lawsuit, James said the NRA's incorporation as a nonprofit in New York gave her authority to seek its dissolution. The NRA filed a countersuit in federal court in Albany, New York, accusing her of violating its free speech rights because she disliked its politics.

The NRA accused James, a Democrat, of seeking a "corporate death sentence" in a partisan push to fulfill a "career goal."

Sixteen Republican attorneys general filed a brief supporting the NRA's case.

Friday's move will likely put the New York lawsuit on hold, and a reincorporation in Texas could strip James of her power to dissolve the group.

(Reporting by Jan Wolfe and Jonathan Stempel; Editing by Rosalba O'Brien and Jonathan Oatis)

[© 2021 Thomson Reuters. All rights reserved.]

Copyright 2021 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.