NRA committee of unsecured creditors says case shouldn’t be dismissed

By Sarah Lizee

Olympia, Wash., March 17 – The National Rifle Association of America’s official committee of unsecured creditors said that the NRA’s Chapter 11 bankruptcy case should not be dismissed, according to court documents filed Tuesday with the U.S. Bankruptcy Court for the Northern District of Texas.

As previously reported, New York’s attorney general and the association’s largest unsecured creditor, Ackerman McQueen, Inc., have both asked the court to either dismiss the case or appoint a Chapter 11 trustee.

The argument for dismissal is that the bankruptcy filing was a litigation ploy orchestrated by the NRA to avoid the consequences of the attorney general’s regulatory action. Because the company claims it is financially healthy, the parties argue that the Chapter 11 case was filed in bad faith.

“The dismissal of these Chapter 11 cases could be the first step down an inexorable path towards the dissolution and disbanding of the NRA, an outcome that the NYAG seeks as part of its regulatory action,” the committee said.

“Eviscerating and dissolving the NRA would be an abject disaster, resulting in not only the loss of jobs to the NRA’s employees but also the loss of a venerable long-standing institution that has served, and continues to serve important political, educational and charitable roles in this country.

“Dissolution of the NRA clearly is not in the best interests of creditors, especially those creditors (and other parties in interest) that value its mission and continue to conduct business with the NRA.”

The committee said that if the allegations of mismanagement and misconduct against the NRA are proven, continuation of the bankruptcy process is the best path to facilitate the operational and governance restructuring needed to ensure those concerns are appropriately addressed.

The group said that it opposes the appointment of a Chapter 11 trustee, which would facilitate an across-the-board displacement of the debtors’ current management, and believes that doing so would not be in the best interests of creditors.

However, if the court were inclined to appoint a Chapter 11 trustee, the committee said it believes that an alternative and “less drastic” action is available and should be considered. Specifically, the court is empowered to appoint a Chapter 11 trustee with limited powers, who can work in concert with, rather than displacing, the debtors’ management and professionals.

“The appointment of a trustee with limited powers would immediately help foster a culture of managerial independence that seemingly would address the ‘conflict’ concerns raised by the moving parties,” the committee said.

The gun rights advocacy group filed Chapter 11 bankruptcy on Jan. 15 under case number 21-30085.

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