Chapter 11

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“A Personal Agenda”?

February 10, 2021 by 4 Comments

Judge Phillip Journey hit a nerve with his motion for appointment of an examiner in the NRA’s Chapter 11 bankruptcy filing. So much so that the powers that be felt compelled to send an email to all members of the Board of Directors after 9pm Monday night.

The email was by NRA President Carolyn Meadows. Let me correct that last statement. The email was from Carolyn Meadows but it was so lawyerly crafted that I have immense doubts that she herself composed it.

She starts off by mentioning the court filing and then asserts the Judge Journey misunderstands the NRA’s bylaws. She says he is mistaken in his belief that the formation of the Sea Girt LLC vehicle and the Chapter 11 bankruptcy filing required special board approval. She asserts that the revised employment contract of Wayne LaPierre which was approved by the entire board provided that authority.

I am not a lawyer nor am I an expert in bankruptcy law. However, from everything I’ve read elsewhere from real experts in bankruptcy law, the formation of special entities and especially the filing of a bankruptcy requires an expressed approval from a board. In other words, it is not a power that can be delegated to the hired staff like Wayne.

The Complementary Spouse read over the email as well. Her take was that this email actually, for the most part, did not dispute Judge Journey’s motion so much as dance around it.

Then there was this line: “I find it disgraceful anyone would suggest otherwise to advance a personal agenda.” That was in reference to the line in the motion of how at least one board member was told to sit down and shut up. The Complementary Spouse noted the irony of accusing a board member of having a personal agenda when no one has a bigger personal agenda than Wayne LaPierre.

The email ends by saying if any board members have questions to please direct them to the board’s attorney Wit Davis. I should point out that he was hired by Wayne LaPierre to replace Steve Hart who LaPierre fired.

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NRA’s Bankruptcy Petition

January 15, 2021 by 1 Comment

There are two major things of note in the National Rifle Association’s Chapter 11 bankruptcy petition. First, there is the resolution passed at the January 7, 2021 Board of Director’s meeting in Dallas giving Wayne LaPierre the authority to “reorganize or restructure the affairs of the Association.”

The second item of note contained in the bankruptcy petition is the list of unsecured creditors. At the top of that list is Ackerman McQueen with a disputed claim of $1,273,800.12. Also disputed are claims from Tony Makris’ Under Wild Skies and the Ack Mac subsidiary Mercury Group. The rest of the unsecured creditors are an assortment ranging from Google to UPS. Most seem to be related to fund raising or advertising.

What is most interesting in that list is what is not there. There is no mention of any legal bills due to William Brewer III’s firm Brewer, Attorneys and Counselors. This could mean that he is a secured creditor or that any monies due him have already been paid.

It seems obvious that this move has been in the works for many months. Sea Girt LLC was established in November 2020 according to the filing with the Texas Secretary of State’s office. Moreover, the litigation committee was set up in September and probably had been discussed many months in advance of that.

According to the letter from Wayne LaPierre, this move will not impact members as the NRA is simply leaving a toxic state for one that is welcoming.

NRA supporters will continue to enjoy all their full member benefits – from new members to Life Members to Benefactor Members. We will continue to publish and deliver your magazines. We will continue to train Americans and teach them firearm safety. We will continue to teach hunter safety. But most importantly, we will continue to fight for your freedom and the freedom of all Americans – as we have for all these years. In fact, we are expanding our national platform.

The plan aims to streamline costs and expenses, proceed with pending litigation in a coordinated and structured manner, and realize many financial and strategic advantages.

You know that our opponents will try to seize upon this news and distort the truth. Don’t believe what you read from our enemies. The NRA is not “bankrupt” or “going out of business.” The NRA is not insolvent. We are as financially strong as we have been in years. (emphasis his)

While I think it is good that the NRA ditches New York, I really wish that they had listened to Professor Joe Olson when, as a board member and expert in corporate law, he urged them to do it in 1991. Think of all the monies that would have been saved in litigation expenses that could have been used to promote the Second Amendment.

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NRA To Reincorporate In Texas

January 15, 2021 by 4 Comments

After 150 years, the National Rifle Association is finally abandoning New York. They have filed a Chapter 11 bankruptcy filing in the US Bankruptcy Court for the Northern District of Texas and plan to reincorporate in Texas.

Here is the full press release sent out this afternoon by Wayne LaPierre. I will have more on the bankruptcy filing after I have had time to read it. Imagine how much time and legal expense they could have saved if they had listened to law professor Joseph Olson when he suggested as a board member in 1991.

NRA Leaves New York to Reincorporate in Texas, Announces New Strategic Plan

NRA Plans to Exit New York to Pursue Opportunity, Growth and Progress in Texas; Plan Benefits Association, Its Millions of Members, and All Supporters of the Second Amendment

Fairfax, VA – The National Rifle Association of America (“NRA”) today announced it will restructure the Association as a Texas nonprofit to exit what it believes is a corrupt political and regulatory environment in New York. The move will enable long-term, sustainable growth and ensure the NRA’s continued success as the nation’s leading advocate for constitutional freedom – free from the toxic political environment of New York.

The NRA plan, which involves utilizing the protection of the bankruptcy court, has the Association dumping New York and organizing its legal and regulatory matters in an efficient forum. The move comes at a time when the NRA is in its strongest financial condition in years.

The NRA will continue with the forward advancement of the enterprise – confronting anti-Second Amendment activities, promoting firearm safety and training, and advancing public programs across the United States. There will be no immediate changes to the NRA’s operations or workforce.  

The Association will seek court approval to reincorporate the Association in the State of Texas – home to more than 400,000 NRA members and site of the 2021 NRA Annual Meeting in Houston.

“This strategic plan represents a pathway to opportunity, growth and progress,” says NRA CEO & EVP Wayne LaPierre. “Obviously, an important part of this plan is ‘dumping New York.’ The NRA is pursuing reincorporating in a state that values the contributions of the NRA, celebrates our law-abiding members, and will join us as a partner in upholding constitutional freedom. This is a transformational moment in the history of the NRA.”

The restructuring plan aims to streamline costs and expenses, proceed with pending litigation in a coordinated and structured manner, and realize many financial and strategic advantages.

The Path Forward

The NRA will move quickly through the restructuring process. Its day-to-day operations, training programs, and Second Amendment advocacy will continue as usual.

By exiting New York, where the NRA has been incorporated for approximately 150 years, the NRA abandons a state where elected officials have weaponized the legal and regulatory powers they wield to penalize the Association and its members for purely political purposes.

In the summer of 2018, then New York Attorney General candidate Letitia James vowed that, if elected, she would use the powers of her office to investigate the “legitimacy” of the NRA.

Without a shred of evidence to support the claim, she called the Association a “terrorist organization” and a “criminal enterprise.” As promised, she commenced an “investigation” upon being elected to the Office of NYAG and, predictably, filed a lawsuit seeking to dissolve the NRA just prior to the November 2020 national election.

The NRA filed a lawsuit in August 2020 against the NYAG similar to its lawsuit against New York Governor Andrew Cuomo and the New York State Department of Financial Services, filed in 2018. The NRA pursues the defendants for attempting to “blacklist” the organization and its financial partners in violation of their First Amendment rights. The NRA will continue those legal actions.  

“Under this plan, the Association wisely seeks protection from New York officials who it believes have illegally weaponized their powers against the NRA and its members,” says William A. Brewer III, counsel to the NRA in those cases. “The NRA will continue the fight to protect the interests of its members in New York – and all forums where the NRA is unlawfully singled out for its Second Amendment advocacy.”

With respect to its headquarters, the NRA has formed a committee to study opportunities for relocating segments of its business operations to Texas or other states. The Association will analyze whether a move of its headquarters, now located in Fairfax, Virginia, is in the best interests of its members. In the meantime, the NRA’s general business operations will remain in Fairfax.

To facilitate its strategic plan and restructuring, the NRA and one of its subsidiaries filed voluntary chapter 11 petitions in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division. Chapter 11 proceedings are routinely utilized by businesses, nonprofits and organizations of all kinds to streamline legal and financial affairs.  

The NRA also announced Marschall Smith will serve as Chief Restructuring Officer. A former Senior Vice President and General Counsel of 3M Company, Smith has more than 35 years of legal and business experience with an emphasis on compliance, corporate finance, and corporate governance.

“I am honored to join the nation’s oldest and largest civil rights organization during this important time,” Smith says. “Our goal is to work through the restructuring process efficiently and quickly – even as NRA leadership approaches 2021 with renewed energy and an expanding national platform. This plan has no impact on the NRA’s most important goal:  serving its membership and protecting the Second Amendment.”

The NRA will propose a plan that provides for payment in full of all valid creditors’ claims. The Association expects to uphold commitments to employees, vendors, members, and other community stakeholders.

“The plan allows us to protect the NRA and go forward with a renewed focus on Second Amendment advocacy,” says NRA President Carolyn Meadows. “We will continue to honor the trust placed in us by employees, members and other stakeholders – following a blueprint that allows us to become the strongest NRA ever known.”

Additional Information:

Patrick J. Neligan of Neligan LLP, Dallas, Texas, is serving as debtor’s counsel; William (Wit) Davis is counsel to the NRA Board of Directors and its Special Litigation Committee; Brewer, Attorneys & Counselors, Dallas, Texas, serves as special counsel to the NRA. To learn more, please visit www.nra.org/forward.

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Remington Declares Bankruptcy…Again

July 28, 2020 by 1 Comment

Remington and its subsidiary companies declared bankruptcy for the second time in little more than two years. The Chapter 11 filing was made in US Bankruptcy Court for the Northern District of Alabama. There were separate filings for Remington Arms Company LLC, Remington Outdoor Company Inc., and Remington Arms Distribution Company LLC.

In reports prior to its actual filing for bankruptcy, it had been speculated that the Navajo Nation would be the buyer to take it out of Chapter 11. According to the investing site Seeking Alpha those talks broke down.

Remington had been searching for potential buyers and was in talks to sell itself out of bankruptcy to the Navajo Nation before negotiations collapsed in recent weeks, leaving the company without a lead bidder, or stalking horse.

I had speculated along with others that having the Navajo as the owners would put a crimp in the pending lawsuit in Connecticut over liability for the Newtown murders. This would have been due to the sovereign immunity of the Navajo Nation.

The bankruptcy filings indicate assets of between $100 million and $500 million with liabilities in the same range.

The five largest creditors are all governmental entities. They include (in order) the Pension Benefit Guaranty Corporation, the State of Arkansas, the City of Huntsville, the State of Alabama, and the State of Missouri.

This is followed by companies that make smokeless powder like St. Marks and Alliant, that provide forgings and barrels like Dasan USA, and those that supply basic materials (lead, copper, brass) like Doe Run and Eco-Bat Indiana. The only tax creditor listed was the Village of Ilion, NY which came in as the 38th largest creditor. This last bit leads me to speculate that Remington had been keeping up with its payroll, income, and excise tax payments.

Now that talks with the Navajo Nation have broken down and there is no lead bidder or stalking horse, it will be interesting to see how Remington comes out of this Chapter 11 bankruptcy. In its prior bankruptcy, I think it was a forgone conclusion that the hedge fund Cerberus would transfer ownership to investors Franklin Templeton and JP Morgan.

Here, we just don’t know. I would love to see the Navajo – or any tribe – emerge as the buyers if only so as to screw the Brady Campaign and the ambulance chasing lawyers in Connecticut. Time will tell and I’ll keep reporting on it.