Judge in NRA Bankruptcy Case Needs to Appoint an Examiner, NOT Dismiss

USA – -(AmmoLand.com)- The NRA Board of Directors (or at least a number of the members) met in Dallas on Saturday, May 1, 2021, for the express purpose of approving a Reorganization plan to be submitted to the bankruptcy court.

I’m not sure how many members were in attendance, but I’m pretty sure it was not much more than half of the 76 members. (It only takes 25 to constitute a quorum.) Director Rocky Marshall put forward a motion to expand the Special Litigation Committee, which has been empowered by the Board to oversee the bankruptcy and other litigation, and which is made up of just the three officers: President Meadows, 1st VP Cotton, and 2nd VP Lee. Marshall’s proposal was to add five additional Directors to the committee. It was rejected overwhelmingly, with only two votes in favor.

That should give you an idea of just how tightly in lock-step this Board is.

As to the Reorganization Plan… I’m not a lawyer or any sort of expert on these matters, but to my layman’s eye, the plan looks completely hollow. While it contains a whole lot of words, it has no substance. The big feature is the proposed creation of a Chief Compliance Officer position answerable directly to the Board, to make sure the Association is always in compliance with its bylaws and other applicable laws and regulations. Beyond that, it just says that they will hire a reorganization expert and modify the Bylaws and structures of the NRA in accordance with that expert’s suggestions – to the extent that the Board agrees. Everything else in the document is just legal base-covering to the effect that all of the obligations and liabilities of the current NRA will convey to the new Reorganized NRA.

Oh… And there’s a clause to ensure that a whole bunch of money is set aside up-front to make sure “professionals” (Brewer and his lawyer pals) get paid first, no matter what else happens.

I said over a year ago that the Board had two choices: Clean house (firing LaPierre and anyone else with even a hint of corruption around them) and throw themselves on the mercy of the court as the victims of executive abuse, OR circle the wagons around Wayne and keep circling right down the drain.

I stand by that observation. This Reorganization Plan was quite probably the last chance the Board had to make things right, and they blew it. Any serious reorganization plan would have started with the replacement of almost the entirety of senior staff, and an outline for the establishment of a new governing board, with a plan for doing that through member elections.

The main objective of the NRA Reorganization Plan at this point is to convince the bankruptcy judge that the organization is totally committed to preserving the Association, its assets, and its reputation, for the benefit of the members. The Board needed to convince Judge Hale that they’re serious about being totally transparent and above reproach in everything they do, and that they’re all prepared to fall on their collective swords for the benefit of the Association.

That’s certainly not the message being conveyed by the plan the Board approved and submitted.

After reading the NRA’s Reorganization Plan, I was convinced that the judge would only consider two options: Either throw the whole thing out OR appoint a Trustee. If a Trustee is appointed, there’s a very good chance (s)he will burn the place to the ground.

Last Thursday, the judge instructed the various attorneys to be prepared to answer a question of the proper role of the Bankruptcy Court, when they returned on Monday. The judge noted that the primary role of Chapter 11, is to prevent the dissolution of an entity through Chapter 7, then asked: “whether using Chapter 11 to avoid dissolution due to state laws and the actions of a state court, would be right and proper.”

Many have interpreted this question to translate to; “On Monday, tell me why I shouldn’t throw this case out on its keister.”

Attorneys from the NY AG and Ackerman McQueen, encouraged the judge to do just that, while attorneys for NRA begged him not to. David Dell’Aquila’s attorney encouraged the appointment of a Trustee, while Phil Journey’s attorney encouraged the appointment of an Examiner. Interestingly, the US Trustee’s office also seemed to be supportive of an Examiner. It appears that everyone – except NRA – opposed NRA’s idea of a Chief Restructuring Officer.

There’s no doubt that New York is systemically hostile toward NRA. The judge in the NY case sided with NRA in their suit against reimbursing former President Ollie North, but maybe he just really had a grudge against North and figured he’d have plenty of time to stick it to NRA. Who knows. What we do know is that the NY AG called NRA a terrorist organization, and their legislature actually changed laws to favor Governor Cuomo and the state over the NRA in another lawsuit, so definitely a hostile environment.

As I understand it, even if all of the reasons that the NRA filed for Chapter 11 are bogus, but the filing is actually beneficial to the Association or its members for other reasons, that’s enough “good faith” for the case to remain in the bankruptcy court.

I would argue that this is exactly the case here.

The problems within the NRA are all at the very top, not the organization itself, and certainly not the members. The reality in the NY dissolution suit is that, if the AG’s charges are true, the NRA and its members were victims of corrupt executives and an enabling, rubber-stamp Board, yet the AG wants to punish the members – and she is the one legally tasked with representing our interests in the case.

That’s the best argument as to why the bankruptcy should be allowed to move forward, and why it is critical that a Members’ Committee be formed to represent member’s interests in the case. I hope Judge Hale is seeing things this way.

All is not lost, but hope is dimming. If the judge dismisses the bankruptcy, the NY suit proceeds and Letitia James will be out for blood and the end of the NRA. If the judge keeps the case but appoints a Trustee, there’s a good chance of political interference possibly pushing the case from Chapter 11 to Chapter 7, and the dissolution of the Association.

Appointment of an Examiner seems to me to be the best hope, as the Examiner would report to the judge, leaving less room for political interference, but still be able to cut out the cancer and institute reasonable safeguards for the future.

The NRA definitely needs to be restructured, and that’s where a Members Committee could be extremely helpful. I’ve been thinking about what a new structure might look like, and plan to throw some ideas on the table in a future article – if it looks like the Association is going to survive long enough to make the reforms possible.

Stay tuned. We are at a critical juncture and NRA’s fate could be decided within a few weeks.

About Jeff Knox:

Jeff Knox is a second-generation political activist and director of The Firearms Coalition. His father Neal Knox led many of the early gun rights battles for your right to keep and bear arms. Read Neal Knox – The Gun Rights War.

The Firearms Coalition is a loose-knit coalition of individual Second Amendment activists, clubs, and civil rights organizations. Founded by Neal Knox in 1984, the organization provides support to grassroots activists in the form of education, analysis of current issues, and a historical perspective of the gun rights movement. The Firearms Coalition has offices in Buckeye, Arizona, and Manassas, VA. Visit: www.FirearmsCoalition.org.

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