« Fairness and Flexibility: Understanding Corporate Bankruptcy’s Arc | Main | Is the NRA Board Shooting Itself in the Foot By Doing Nothing? »

NRA Examiner Motion

posted by Adam Levitin

As I predicted, things were not going to go so smoothly for the National Rifle Association in bankruptcy. Today, the Hon. Phillip Journey, a Kansas state judge who was recently elected to the NRA's board of directors, filed an examiner motion in the case. There are some bombshells in Judge Journey's motion, including that the NRA board was never informed of the bankruptcy filing or the creation of the venue-hook subsidiary! 

That cause me to go back and look at the NRA's bankruptcy petition. There's no board authorization of the filing attached! Instead, there's an authorization by the NRA's special litigation committee. The special litigation committee's purported authority to file the NRA for bankruptcy is language in its enabling resolution about undertaking actions to "reorganize or restructure the affairs of the Association". Is that a grant of authority for a chapter 11 filing? I'm skeptical. I would have expected express language about filing "for bankruptcy under title 11 of the United States Code" or the like. "Reorganize or restructure the affairs" could include a lot of things other than bankruptcy, and given the importance of bankruptcy for corporate governance, this doesn't seem like the sort of power to be given by implication. 

Comments

Looking at the bylaws. Article 6, section 2, forbids the executive committee to change the bylaws, change the nature of the organization, so it’s real estate, or create a merger with another corporation. Article 11, section 5, says no special or standing committee may exercise of power forbidden to the executive committee. It sounds like this special committee on litigation has no power to do the things that will be necessary to achieve the plan. See also article 16, requiring elaborate measures before the articles of incorporation can be changed.

I haven't looked at the bylaws, but it's starting to sound like the Gang that Couldn't Shoot Straight...

In consumer cases, bankruptcy courts routinely hold that a general financial power of attorney that authorizes any and all actions is insufficient to allow a bankruptcy filing unless that is explicitly allowed

I was a NRA Director from 1991 to 2000. The EVP (Wayne) and the staff treated the Directors individually and when on Board Committees like the proverbial mushrooms.

The comments to this entry are closed.

Contributors

Current Guests

Follow Us On Twitter

Like Us on Facebook

  • Like Us on Facebook

    By "Liking" us on Facebook, you will receive excerpts of our posts in your Facebook news feed. (If you change your mind, you can undo it later.) Note that this is different than "Liking" our Facebook page, although a "Like" in either place will get you Credit Slips post on your Facebook news feed.

News Feed

Categories

Bankr-L

  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

OTHER STUFF