A judge for the US Bankruptcy Court for the Northern District of Texas dismissed the National Rifle Association’s (NRA) Chapter 11 bankruptcy filing on Tuesday, finding that the NRA did not file the petition in good faith. The decision focused on “whether the existential threat facing the NRA is the type of threat that the Bankruptcy Code is meant to protect against.”

The NRA filed the Chapter 11 bankruptcy claim and announced a move to Texas after New York’s attorney general sought to dissolve the organization for fraud. The NRA claims it filed the bankruptcy case to streamline litigation costs, reduce operating costs, modernize their charter and organization structure, or to obtain a breathing spell. However, the court found that the primary purpose of the bankruptcy filing was to avoid potential dissolution by the New York attorney general.

Organizations can file for bankruptcy in good faith when faced with an existential crisis, such as when facing litigation that may render the organization insolvent; and the NRA is facing an existential crisis. However, the NRA is in its strongest financial position in years and is not facing a lawsuit seeking monetary damages. Rather, the NRA is facing dissolution under Article 11 of the New York Not-For-Profit Corporation Law, which allows for judicial dissolution of non-profits that conduct business in a persistently fraudulent or illegal manner. According to the court, this is not the type of existential threat that the Bankruptcy Code is meant to protect against.

The case was dismissed without prejudice but the judge warned that should the NRA file a new bankruptcy case the court would appoint a trustee “out of concern that the NRA could not fulfill the fiduciary duty required by the Bankruptcy Code.” The case for dissolution of the NRA will continue in the New York County Supreme Court.