(Bloomberg) -- The National Rifle Association of America is “not afraid” of a lawsuit threatening it with dissolution in New York and is prepared to proceed with the legal battle despite its bankruptcy filing, a lawyer for the group said in court.
The gun-rights group is “not in any way attempting to escape regulatory supervision,” Patrick Neligan, the NRA’s bankruptcy attorney, said in its first Chapter 11 hearing Wednesday. “It’s simply false” that the NRA is running away from the litigation in New York, he said.
When the NRA filed for bankruptcy on Friday, it said in a statement the Chapter 11 filing would facilitate its plans of “dumping New York” and exiting its “toxic political environment.” Wayne LaPierre, the NRA’s chief executive officer, said in a letter the same day, “We are leaving the state of an attorney general who, just a few months ago, vowed to put us out of business through an abuse of legal and regulatory power.”
The New York Attorney General’s office is “very concerned” about the statements, James Sheehan, chief of the state’s charities bureau, said in the hearing, which was held by videoconference. Attorney General Letitia James has sued the NRA for fraud, and the NRA plans to argue for dismissal of that lawsuit on Thursday in New York State Court.
Read more: NRA runs to Texas but perhaps cannot hide with bankruptcy
Centralizing Suits
Rather than escape the New York litigation, the bankruptcy filing is a way to “centralize” a multitude of current and potential lawsuits the NRA is facing, Neligan said. He cited a wrongful death lawsuit, insurance litigation and actions from various state agencies.
“It’s become increasingly evident that the NRA, like many other companies that have previously filed for Chapter 11, needed the breathing spell that Chapter 11 provides,” Neligan said.
U.S. Bankruptcy Judge Harlin Hale urged parties to put their emotions about the case aside.
“There are a lot of strong feelings in this case,” Hale said during the hearing. “I would ask that everyone sort of ratchet that part of the case down some, now that we’re in bankruptcy court. Bankruptcy in some ways is a miraculous place to be in that the debtor has an opportunity to reorganize its affairs, and on the other hand, for the benefit of creditors, the debtor has to be 100% transparent.”
(Michael R. Bloomberg, founder of Bloomberg News parent Bloomberg LP, is a donor to candidates and groups that support gun control, including Everytown for Gun Safety.)
The case is National Rifle Association of America, 21-30085-11, U.S. Bankruptcy Court for the Northern District of Texas (Dallas). To view the docket on Bloomberg Law, click here.