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Bankruptcy Litigation Regulation

Escape New York: Court Dismisses NRA’s Chapter 11 As Improper Tactic to Avoid New York’s Non-Profit Regulatory Scheme

This article explores the competing factors the Bankruptcy Court considered and the rationale underlying its decision to grant the drastic relief of dismissing the NRA’s bankruptcy case.

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On May 11, 2021, U.S. Bankruptcy Judge Harlin Hale of the U.S. Bankruptcy Court for the Northern District of Texas issued a decision dismissing the Chapter 11 case of the National Rifle Association and certain of its affiliates. The high-profile New York-based non-profit sought bankruptcy protection in Texas on Jan. 15, 2021 and immediately faced a bevy of motions seeking dismissal of its Chapter 11 case pursuant to Section 1112(b) of the Bankruptcy Code filed by: 1) a former vendor-turned-litigation adversary, Ackerman McQueen, Inc.; 2) the New York Attorney General (NYAG); and 3) the District of Columbia Attorney General. A separate motion seeking the appointment of an examiner pursuant to section 1104(c) of the Bankruptcy Code was also filed. This article explores the competing factors the Bankruptcy Court considered and the rationale underlying its decision to grant the drastic relief of dismissing the NRA’s bankruptcy case.

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