A federal judge has dismissed the National Rifle Association's petition for bankruptcy, saying it was filed in "bad faith" in order to avoid litigation by the New York Attorney General's Office, which has sued to dissolve the NRA for allegedly misusing charitable funds.
Tuesday's decision means the NRA will not have bankruptcy protections, which it has said is needed to protect against a "barrage of litigation" the organization is facing.
The decision from Judge Harlin Hale, of the Northern District of Texas, came after a month-long trial in which NRA attorneys and officials argued that their bankruptcy case should move forward in Texas. New York Attorney General Letitia James' office intervened in the case and asked to dismiss the petition, saying the NRA's decision to file for bankruptcy in Texas and ask to be reincorporated there was a way to "remove the NRA from regulatory oversight."
Hale agreed with James' office's argument in his ruling issued Tuesday.
"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," Hale wrote in his decision.
Hale also declined to appoint a trustee or examiner to oversee the NRA's finances.
CNN has reached out to a spokesman for the NRA for comment.
"Today's order reaffirms that the NRA does not get to dictate if and where it will answer for its actions," James said in a statement. "The rot runs deep, which is why we will now refocus on and continue our case in New York court. No one is above the law, not even one of the most powerful lobbying organizations in the country."
Hale declined to dismiss the case with prejudice, meaning the NRA could still decide to file a bankruptcy petition in another venue, but Hale warned that if the NRA choses to file a new bankruptcy case, his court would immediately take up some of its concerns about "disclosure, transparency, secrecy, conflicts of interest of litigation counsel," among others, which could lead to the appointment of a trustee to oversee the organization's affairs. A spokesman for the NRA has not responded to CNN's request for comment on if the organization plans to file for bankruptcy elsewhere.
Brian Mittendorf, a professor of accounting at Ohio State University who has followed the NRA's finances for several years, said the ruling has implications for the various lawsuits the NRA is facing, as well as its financial future.
"In many ways it was a high-risk gambit to think that a bankruptcy court would allow them to bypass some of that litigation," Mittendorf told CNN. "The ruling just clears up that fact that that litigation is going to continue and that there isn't this remedy that entailed a third-party effectively running the organization in the meantime."