In a showdown with New York State, the National Rifle Association is trying an unusual strategy. Legal experts doubt it will work.
By Danny Hakim and Mary Williams Walsh
Not long after the National Rifle Association declared bankruptcy last Friday, one of its board members wanted to set the record straight.
“It has nothing to do with the N.R.A.’s financial posture, which is very, very strong,” said Bob Barr, a former Republican congressman from Georgia, in a TV interview. “It simply is a legal vehicle to move under protection of federal laws, to escape the abuse by the New York authorities.”
The organization’s audacious bankruptcy filing, in which it is not actually claiming to be insolvent, seeks to use the bankruptcy process to circumvent regulators in New York, where the N.R.A. has been chartered for a century and a half. The state’s attorney general, Letitia James, sued the association in August, seeking to shutter it amid claims of mismanagement and corruption. The N.R.A. said in its legal filings that New York officials had long sought to “weaponize the state government’s regulatory powers against it” and that the association now wanted to reincorporate in Texas.
But the claims of corruption have not come just from New York, or the political left. They are echoed in accusations leveled by former senior N.R.A. officials, including its onetime president Oliver L. North, some of its own donors and board members who departed amid a civil war within the association. What’s more, the organization disclosed in its most recent tax filings that Wayne LaPierre, its embattled chief executive, had repaid it hundreds of thousands of dollars.
Legal experts said the bankruptcy filing was likely to either be rejected or lead to a leadership purge, and was a sign that the organization and Mr. LaPierre were cornered by regulators.
“I see it as a Hail Mary for them,” said Adam J. Levitin, a professor specializing in bankruptcy at Georgetown University. “They may know they’re dead in the water if they don’t get out of the A.G.’s grasp.”
The N.R.A. is not financially under water; this week, it reported having assets roughly $50 million greater than its debts. Although there is some precedent for organizations that are not bankrupt to declare bankruptcy — Texaco’s 1987 case led the way, when the company sought to evade a more than $10.5 billion Texas court judgment against it — judges screen cases to make sure the company is acting in good faith, as required by the Bankruptcy Code. A judge who finds bad-faith behavior can throw out the case.
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