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Four Good Reads On NRA Bankruptcy

May 13, 2021 by

Bitter and Sebastian at Shall Not Be Questioned have been part of the gun blogosphere for a long, long time. While not as active as they used to be, they are still astute observers of all things NRA.

Bitter has a wonderful fisking of the NRA’s public response to Judge Hale’s dismissal of their bankruptcy case.

She concluded:

In general, this public response highlights that it’s time for Wayne to go, along with most of the yes men he has put into place. This is an embarrassment to the organization, especially as anyone remotely literate can read what the judge really said.

The blog NRA In Danger also provides a brutal fisking of the NRA’s public statement. They may be the new kids on the block in terms of blogging but whoever is writing the blog has a deep, insider knowledge of how things actually work at the NRA.

When a bankruptcy judge who has been on the bench many years, and “seen them all,” says conduct shocks him, you’re hearing it from an expert.

NRA CEO & EVP Wayne LaPierre said today’s decision – and the ongoing independence of the NRA – empowers the Association’s approximately 5 million members. 

If the suit being dismissed empowers the members, does that mean that winning the suit would have dis-empowered them?

“We will never shrink from the tough and principled stands we take”

I’m getting too nauseous to continue. Hitler in his bunker was less delusional.

We had better enjoy the NRA annual meeting in four months, because it will probably be the last annual meeting. Anyone on, or getting elected to, the board, had best face the fact that they face lifelong dishonor as a member of the board that killed this fine organization. NRA has had men who held the Medal of Honor on its board, but they have been replaced by people who tremble at the thought just of dissenting. Let the leadership go insane and destroy the 150-year-old organization, these directors would rather not grow a spine.

Frank Tait, who I supported in his efforts to win a seat on theBoard and who I will be writing in for election to the Board, looked at the bankruptcy effort from a business perspective. He, after all, has been in managerial positions for many years.

“So why did you file? We can only guess that the lawyers saw the prospect of a wealthy client who wasn’t adverse to paying big fees, and thought of nothing else. Not even the most core ideas: 1. What do we want from the court? 2. is that something the court can legally give us?”

In my 40 years in business, I’ve been involved in multiple legal disputes. There is critical mindset to legal matters. THE LAWYERS WORK FOR YOU, not the other way around. The secondary mindset is risk-reward considerations, or as a former CEO liked to say “is the juice worth the squeeze.” Both of these key mindsets appear absent from the EVP and the Officers of the Board – and the remainder of the board is not asking the tough questions that are their fiduciary obligation.

Finally, Georgetown Law professor Adam Levitin has been following the case from the start. He may not be aware of the inner dynamics of the NRA but he wrote the textbook on bankruptcy law. His verdict on the filing from a legal standpoint is that it was a fool’s errand from the start.

The NRA’s bankruptcy petition was dismissed as filed in bad faith. I’m predicting that the court’s opinion will be in the next edition of every bankruptcy textbook as the case really is a textbook example of bad faith.  The court found that there was substantial evidence in the record that the NRA filed for bankruptcy for the purpose of gaining an advantage in its litigation with the NY Attorney General, namely depriving the NY Attorney General of the remedy of dissolution, rather than for any other purpose.  

He notes he’d be surprised if the NRA appeals or refiles. Moreover, he wonders if the creditors’ attorneys will file a sanctions motion against either the NRA or its attorneys for reimbursement of their litigation costs given the bad faith filing ruling.

Read all four of these blog posts. They all take a different approach but all conclude the whole bankruptcy filing was a fiasco.

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The Full NRA Response To Bankruptcy Dismissal

May 12, 2021 by 6 Comments

The NRA has put out a much longer and complete response to the dismissal of their Chapter 11 bankruptcy case. A quick read through it shows a few thing. First, they are trying to put a positive spin on what is really not a positive for the NRA. That is to be expected.

Second, they cherry-picked the decision. When they say they have the option to file a new case, they forget to say the judge said any new case would have a trustee. That would mean Wayne and Bill Brewer would be booted. Do you really think Wayne and Brewer would file again when they know they are out?

Third, Wayne and the rest of the “Gang of Four” (as some have called them) all made statements to the effect that the NRA is strong, secure, and they will keep up the good fight. The question is are they fighting to keep their positions or actually fighting to advance the Second Amendment. As many have commented, just think what all the millions wasted on the bankruptcy’s legal fees could have done to advance the fight for the Second Amendment.

Below is the NRA’s full response in its entirety. I haven’t even highlighted the stupid shit.

NRA Moving Forward with Legal and Business Strategy in Response to Dismissal of Bankruptcy Filing 

Court Finds That NRA’s Move to Texas Could Still Be Accomplished Outside Bankruptcy

In response to today’s dismissal of a prior bankruptcy filing, the National Rifle Association of America (“NRA”) announced that it will continue to fight on all fronts in the interests of its mission and its members.   

The New York Attorney General and others had aligned against the NRA in opposition to the NRA’s reorganization plan announced on January 15, 2021. They sought to dismiss the NRA’s bankruptcy filing with prejudice or, in the alternative, appointment of a court-appointed trustee, to take control of the Association’s business and financial affairs. Importantly, a United States Bankruptcy Court in Dallas did not appoint a Trustee or examiner, even as it ruled the Association may not proceed with the chapter 11 case. The court dismissed the bankruptcy filing without prejudice, meaning the NRA does have the option to file a new bankruptcy case. 

During a 12-day hearing that occurred over approximately four weeks, the NRA established that it had adopted new policies and accounting controls, displaced many “insiders” who had allegedly abused the Association, and accepted reparations for costs voluntarily determined to be excess benefits. The hearing proceedings focused on the NRA’s compliance efforts, and the organization’s renewed commitment to good governance. 

In an opinion, dated May 11, 2021, the Hon. Harlin D. Hale, U.S. Bankruptcy Judge, Northern District of Texas, wrote, “In short, the testimony…suggests that the NRA now understands the importance of compliance. Outside of bankruptcy, the NRA can pay its creditors, continue to fulfill its mission, continue to improve its governance and internal controls, contest dissolution in the NYAG Enforcement Action, and pursue the legal steps necessary to leave New York.”

Underscoring the importance of the proceedings, Judge Hale previously said the NYAG motion contesting the NRA’s Chapter 11 filing was “the most important motion I’ve ever heard as a judge.”  

The NRA remains determined to further streamline its legal and business affairs in the best interests of its constituents and members.  

NRA CEO & EVP Wayne LaPierre said today’s decision – and the ongoing independence of the NRA – empowers the Association’s approximately 5 million members. 

“The NRA remains committed to its members and our plan for the future,” says NRA CEO & EVP Wayne LaPierre. “Although we are disappointed in some aspects of the decision, there is no change in the overall direction of our Association, its programs, or its Second Amendment advocacy. Today is ultimately about our members – those who stand courageously with the NRA in defense of constitutional freedom. We remain an independent organization that can chart its own course, even as we remain in New York to confront our adversaries. The NRA will keep fighting, as we’ve done for 150 years.” 

The NRA remains determined to confront NYAG Letitia James in her attempt to dissolve NRA. The NYAG seeks such remedies as part of a lawsuit she filed on August 6, 2020. In summer 2018, then NYAG candidate James called the NRA a “criminal enterprise” and “terrorist organization.” Her subsequent pursuit of the NRA has been characterized by many legal experts and constitutional scholars as a gross weaponization of legal and regulatory power.

“The NRA will continue to defend the interests of the Association in New York,” says William A. Brewer III, counsel to the NRA. “Our client has faith in its leadership, and its demonstrated commitment to good governance.” 

“The record reflects the NRA undertook a ‘course correction’ with respect to its management,” says NRA President Carolyn Meadows. “The Association is strong and secure – once again moving forward above the objections of its adversaries and those who oppose Second Amendment freedoms.”

The NRA can still pursue establishing business operations in Texas, and the organization will continue to explore moving its headquarters there from Virginia. Texas is home to more than 400,000 NRA members. 

The bankruptcy hearing became the nation’s highest -profile legal proceeding of its kind. The virtual proceedings, involving more than 20 witnesses, explored novel issues that define the roles and responsibilities of legal defendants subjected to the threat of dissolution. The NRA has maintained it is financially viable, following its current pathway, in part, to escape a toxic political environment in New York. The NRA was incorporated in New York in 1871. 

The legal proceedings revealed the NRA’s commitment to good governance and efforts to follow the “principled path” with respect to its management practices, board oversight, and member obligations under Mr. LaPierre’s leadership. Mr. LaPierre remains at the helm of the organization, directing political affairs, grassroots activities and other functions essential to the defense of the Second Amendment. 

“The record establishes that NRA members can have great confidence in this institution and its plans for the future,” says NRA First Vice President Charles Cotton. “The Association will work with members, vendors, and other constituents to continue the fight for freedom.” 

“Our NRA is pressing forward with its plans, and remains determined to promote constitutional freedoms,” says NRA Second Vice President Lt. Col. Willes K. Lee, USA (Ret). “We will never shrink from the tough and principled stands we take on behalf of our law-abiding 5 million members.” 

Read Judge Hale’s Order Granting Motions To Dismiss here.

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Springfield Responds To SIG’s Patent Suit

May 12, 2021 by

Springfield Armory released a statement responding to the patent infringement suit brought by SIG Sauer. They assert it is frivolous, without merit, and they will fight it in court.

From their release as published in The Outdoor Wire:

Sig Sauer, Inc. has alleged in a federal court complaint that Springfield Armory’s Hellcat® magazines infringe two patents Sig owns. However, Springfield Armory is steadfast in its conviction that those claims are without merit. The innovative design of the Hellcat® magazine is our own and works only with the Hellcat®. The superior design of the Hellcat® magazine is able to hold more rounds in an overall smaller magazine. Springfield Armory’s Hellcat® magazine was independently awarded several patents of its own and has received numerous industry recognitions.

“We feel that these claims are frivolously litigious in nature and designed to thin out the competition in an increasingly crowded firearms market,” explains Springfield Armory President Steve McKelvain. “Springfield Armory will vigorously defend its right to produce the class-leading patented Hellcat® handgun and magazines for our loyal customers––past, present and future.”

I’m sure the rest of the firearms industry will be watching this with interest.

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“No Long Lines”?

May 12, 2021 by 4 Comments

The New York Times is either trying to out-Pravda Pravda or is living in an alternate universe.

No long lines? No major price hikes since malware shut down Colonial Pipeline’s operations?

Are you freaking kidding me!

Courtesy of the Citizen-Times

This is what you are more likely to see in North Carolina.

Courtesy of Winston-Salem Journal

We canceled a trip to see the granddaughters this weekend because we weren’t sure we would be able to get gas to get home. Fortunately, I have 3/4 of a tank and the Complementary Spouse filled up on Saturday when we first heard of the malware attack. I won’t be complaining about having to work from home any time soon.

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Ackerman McQueen’s Response To NRA Bankruptcy Dismissal

May 11, 2021 by

As the NRA’s former public relations and advertising firm, Ackerman-McQueen, had argued for a dismissal in the NRA’s bankruptcy with a trustee as an alternative, I reached out to them for a comment.

I spoke with Bill Power, Executive Vice President – Public Relations, of Ackerman McQueen. He noted that he had previously served at one time as the Director of Public Affairs for the NRA.

His verbatim official statement is:

This decision underscores the incompetence and failure of NRA leadership and its legal team. This is not the first case of a flawed NRA strategy to protect one top official, as this situation has increasingly disturbed NRA members.

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Wayne’s Response

May 11, 2021 by 7 Comments

I’m sure Wayne and Bill Brewer are disappointed.

Judge Hale said the decision to declare bankruptcy was Wayne’s alone and therefore he gave Wayne’s testimony the most scrutiny (p. 18). It was Wayne’s own testimony (p. 23) that sunk the case as he ultimately admitted the primary purpose was to gain a litigation advantage against the NY Attorney General by taking dissolution off the table using bankruptcy. Once it was found that the primary purpose was a litigation advantage, it was the bankruptcy had to be considered in bad faith. The alternative to dismissal was an examiner or trustee but Judge Hale said the strong financial condition plus the new safeguards mitigated against the appointment of either.

I think one of the key paragraphs in the whole decision was this one on page 34:

What concerns the Court most though is the surreptitious manner in which Mr. LaPierre
obtained and exercised authority to file bankruptcy for the NRA. Excluding so many people from
the process of deciding to file for bankruptcy, including the vast majority of the board of directors,
the chief financial officer, and the general counsel, is nothing less than shocking.

It is time for the Board of Directors to step up and do what they should have done a long time ago and that is clean house starting at the top.

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NRA Bankruptcy Dismissed

May 11, 2021 by 6 Comments

Just a few minutes ago, Judge Harlin Hale issued his decision in the NRA bankruptcy case. In what can only be considered a blow for the NRA, he dismissed the case.

He said:

The question the Court is faced with is whether the existential threat facing the NRA is the
type of threat that the Bankruptcy Code is meant to protect against. The Court believes it is not.
For the reasons stated herein, the Court finds there is cause to dismiss this bankruptcy case as not
having been filed in good faith both because it was filed to gain an unfair litigation advantage and
because it was filed to avoid a state regulatory scheme. The Court further finds the appointment
of a trustee or examiner would, at this time, not be in the best interests of creditors and the estate.

I will say I expected him to take the middle ground of either an examiner with enhanced powers or a trustee.

More later after I have had time to read the full decision.

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SIG Sues Springfield For Patent Infringement

May 11, 2021 by

SIG Sauer announced that they filed a patent infringement lawsuit against Springfield Armory yesterday. They allege that the magazines for the Springfield Hellcat infringe upon the patented design of the SIG P365 magazine.

From the complaint filed by SIG, it appears that this controversy has been brewing since December 2019. That was when SIG says they notified Springfield of a violation of one of their two patents on the magazines.

The complaint refers to the magazines in question as the “Accused Products”:

The Accused Products directly, jointly, indirectly, and/or willfully infringe one or more claims in the following SIG SAUER Patents: U.S. Patent Nos. 10,480,880 (“the’880 patent”) and 10, 962,315 (“the’315 patent”) (collectively, the “Asserted Patents”). Springfield Armory markets the Accused Products as being competitive to SIG SAUER’s P365 pistol magazines (the “P365 magazines”).

The case is filed in the US District Court for the Central District of Illinois, Rockford Division. SIG is seeking a declaration of patent infringement, a permanent injunction, and appropriate monetary damages.

Ron Cohen, President and CEO of SIG Sauer, Inc., had this to say:

“When the SIG SAUER P365 was introduced it took the market by storm as the most innovative high-capacity, micro-compact pistol to be introduced due to its magazine capacity, and quickly became one of the top selling handguns in the market due to this unprecedented innovation.  SIG is not a litigious company, but given the extent of infringement by Springfield, SIG has a responsibility to protect both our intellectual property and the significant investment we make to develop our innovative products.  As a company we are proud to yield more than 100 patents worldwide, with more than 40 patent applications currently pending, and we will protect the extensive research and design that goes into developing these patents rigorously.”

It will be interesting to see how this all shakes out. I don’t have a dog in this fight as I don’t own either of these handguns.

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No Decision Yet In NRA Bankruptcy Case

May 11, 2021 by

Judge Harlin Hale has not rendered a decision yet in the NRA’s Chapter 11 bankruptcy case.

Every hour or so today I would check the Federal court’s online website called Pacer to see if anything new related to the case had been filed. The only filing today was by an attorney who wanted to be admitted before the court.

I will keep a watch going tomorrow and every day afterwards until a decision is released.

In the meantime, the blog NRA In Danger has three new posts that are worth reading. The first deals with Wayne, the second with the Board, and the third with the timing of the debacle. I don’t know who is writing that blog but their observations are spot-on.

On Wayne:

From the first, LaPierre was in far over his head. He was educated in politics and made his living in lobbying. He had zero training and experience in lobbying, and now he the supreme leader of what became a $350 million a year corporation. It was as if you took a not-particularly-bright private and gave him command of a brigade. “What do I do now?”

La Pierre’s handlers, the real power. He reacted by relying on “handlers” and hoping they knew how to handle things. They made all his decisions. In theory the board elected LaPierre EVP, in fact they elected his handlers, Angus McQueen and later Bill Brewer. He became a figurehead while they dictated his decisions.

On the Board:

For most, it is the highest achievement of their life, their greatest boast, and so it is something to be protected at all cost.

Both of these observations perfectly correlate with what I’ve been told by former directors and other insiders. I don’t know what Judge Hale is going to rule but I really hope that he doesn’t accept the reorganization plan as it now stands nor does he leave Wayne in charge minus an overseer.

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The End Of An Era

May 7, 2021 by 4 Comments

If you grew up in a certain era and had your hair cut at a barber shop, there were always a pile of old Field & Stream magazines to read while you waited.

It featured writers like Warren Page talking about rifles, Bob Brister about shotgunning, and A. J. McClane on fishing. It would have humorous essay by Ed Zern with his Exit Laughing column. It had Tap’s Tips from H. G. Tapply which had all sorts of useful tips and tricks. And could you have ever come across an outdoor writer with a better name than Ted Trueblood? Even now they have David Petzel and Phillip Bourjilly as shooting editors.

I received an email dated April 27th from Colin Kearns who is the current editor. He announced that they were going to a 100% digital format along with their sister publication Outdoor Life.

 I also shared that I wasn’t entirely sure what the next phase of Field & Stream’s legacy—the beginning of the next 125 years, if you will—would look like. 

Well, now I do. And I’m excited to share this news with you: Field & Stream is going to be a digital magazine. 

You might be wondering: What does a “digital magazine” mean? Great question. For starters, instead of having issues delivered to your mailbox, they’ll conveniently come to where you already consume so much F&S content every day—to your phone, tablet, or computer. A digital edition also lends itself to a sleeker and more interactive design than a print magazine ever could, opening the door to video, audio, animation, and other dynamic add-ons that will enhance your experience with the magazine. 

At the risk of sounding like a “But wait, there’s more!” infomercial spokesman—there is, in fact, more.

With your digital subscription to Field & Stream, you’ll get access to the F&S archives where you can enjoy many of the best and most famous stories from the history of the magazine. All F&S subscribers will also get a bonus subscription to the all-new digital edition of Outdoor Life magazine. 

It also appears that instead of being a monthly magazine, the publishing format will be that of a quarterly. I guess that leaves Sports Afield of the old big three “hook and bullet” magazines that will still be published in a print edition. Even then, Sports Afield closed and then was reopened by Field Sports Publishing who also owns Safari Press. It is strictly a big-game hunting magazine now.

I know bytes, bits, and pixels are a lot cheaper to produce than laying out a paper magazine. Still, there is a feeling you get from actually holding something printed on paper you just don’t get from a digital edition. I guess at my age nostalgia is an ever present condition.