Filing Summary

At a bankruptcy hearing on Monday, March 15, counsel for the NRA and the New York Attorney General announced they had reached agreement to allow the New York Attorney General to go forward with a deposition of NRA board member Phil Journey.  The deposition is a setback for the NRA, who had requested an “emergency motion for protective order” to block the testimony.

Phil Journey, a sitting Kansas state judge, previously asked the bankruptcy court to appoint an independent examiner to investigate the allegations of waste and fraud at the NRA. As part of this examiner motion, Judge Journey alleged that the NRA Board of Directors was not made aware of the NRA’s intent to file for bankruptcy.

Courtesy of a filing by the New York Attorney General, we now know a little bit more about the lack of notice (much less approval). At pages 2-3 of the filing (see below), the Attorney General notes that on January 7, 2021, the NRA Board of Directors approved a new employment contract for CEO Wayne LaPierre.  There is no evidence that the Board was informed of the pending bankruptcy (which would occur just a few days later), and Judge Journey specifically alleges that there was no such disclosure to the board.

Apparently, the NRA placed an “ambiguous provision” into Mr. LaPierre’s employment contract that he “shall be empowered to exercise corporate authority in furtherance of the mission and interests of the NRA, including without limitation to reorganize or restructure the affairs of the Association for purposes of cost-performing the customary duties of such position and such other commensurate duties as may be assigned from time to time by the Board of Directors.”  The NRA takes the position, according to the Attorney General, that approval of this language in Mr. LaPierre’s employment contract constituted Board “notice, knowledge and authority to file bankruptcy.”

The New York Attorney General summarizes the issue as follows: “the NRA apparently informed its 75 member Board of its intention to put the NRA into bankruptcy by inserting an ambiguous sentence into an Employment Contract which gave the employee duties “for purposes of cost-minimization” of the organization. Hiding a monumentally important provision into an Employment Contract with no discussion of the impending bankruptcy and then to attempt to cover up the entire scenario under the cloak of attorney/client privilege is nothing less than shocking. Mr. LaPierre was conveniently not present at the time that Employment Contract was discussed, and there appears to have been no discussion of a bankruptcy filing because none of the 75 Board Members figured out that they were being asked to approve the massively important corporate event of a Chapter 11 bankruptcy filing.”