Will the NRA Dissolve Following Failed Bankruptcy Attempt?

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Jun. 1 2021, Published 11:36 a.m. ET

After attempting to file Chapter 11 bankruptcy, the fate of the NRA (National Rifle Association) took a swift turn. A federal judge dismissed the case. According to the judge, the NRA didn't use bankruptcy properly. Will the NRA dissolve instead?

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The outcome depends on how the courts sway, but there's bound to be a resolution.

How gun safety movements have shifted the NRA's role in America

Gun violence is up YoY in tandem with a rise in gun purchases. From January 1 to April 26, there were 160 mass shootings injuring or killing at least four individuals (excluding the shooter). This is almost double the rate during the same time period for the last seven years.

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Meanwhile, 6.5 percent of U.S. adults purchased guns over the course of 2020—a rate that's up from 5.3 percent the year prior.

Despite the boost in personally apprehended protection, gun control is becoming increasingly relevant given the rise in mass violence. Amid the NRA's political ties with the Republican party, it toes the line now more than ever. Also, the organization's infighting hasn't left it in good graces with the public.

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The NRA filed bankruptcy in bad faith

While officials in New York state sought to dissolve the NRA over what they claim to be fraudulent and abusive activities, the organization combatted the move with a Chapter 11 bankruptcy attempt. However, a federal judge dismissed this attempt within a month of the NRA opening it.

Reportedly, it's a bad-faith attempt that doesn't align with the purpose of bankruptcy. Wayne LaPierre, the NRA's CEO, used bankruptcy to avoid attorney general involvement. During the bankruptcy trial, LaPierre's personal spending records became public knowledge, which dug the NRA further into a hole with New York and federal officials. 

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As a non-profit organization, the NRA has strict rules about how it can spend money. With non-profit-reserved funds being used for weddings and more, it doesn't seem like that has been the case.

What's next for the NRA?

New York Attorney General Letitia James is in a fight to shut down the NRA. With bankruptcy off the table (which would have allowed the NRA to regroup in Texas and avoid New York involvement), James will continue her lawful fight against the NRA.

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What it means when an organization dissolves

When a corporation or organization dissolves, it ceases to exist legally. The NRA reports having the funds to repay creditors in a bankruptcy situation, but dissolution gets rid of those debts after a certain period of time.

During the dissolution process, a non-profit can't get rid of any assets to those working within or out of the organization.

Whether or not the NRA will dissolve remains in the court's hands

James will continue to pursue liquidation for the NRA. However, James can't influence the decision of the courts. Ultimately, whether or not the NRA dissolves depends on the evidence presented to the courts of the tens of millions of dollars top NRA executives reportedly diverted in fraudulent schemes.

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