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PA – NRA – NRA board member seeks management probe as bankruptcy questions continue

As the National Rifle Association wades deeper into what will likely be a very contentious bankruptcy case, its ability to use the Chapter 11 process to reincorporate in Texas is expected to face challenges from creditors and regulators and has even prompted questions from a member of its own board. Although the case, which was filed last month in the U.S. Bankruptcy Court for the Northern District of Texas, has not yet reached the issue of whether the organization can use the bankruptcy process for its stated purpose of moving itself from New York to Texas, it could, experts say, eventually become a test case for the question of when Chapter 11 protection is sought in “good faith”, as required by bankruptcy law.NRA board member Phillip Journey, who is also a Kansas state judge, on Monday filed papers asking U.S. Bankruptcy Judge Harlin Hale for the appointment of an examiner to investigate the organization’s management and whether it followed its own internal policies before filing for bankruptcy. A potential investigation, combined with the New York Attorney General keeping a close eye on the case, could cause issues surrounding the propriety of the bankruptcy filing to surface soon. The NRA’s Chapter 11 filing last month came while it was facing a lawsuit brought by New York Attorney General Letitia James, who is asking a New York federal court to dissolve the group. The lawsuit accuses the NRA of financial misconduct, saying it diverted millions of dollars to luxury trips for its officers, private jets, and no-show contracts for associates.  [full article]

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