tschnell wrote:
n Germany flying clubs are usually operated as non-profit-organizations and very strict rules regarding governance and structure must be followed. In return, various tax exemptions apply and some limited public funding may be available.
A prepaid-fraud scheme would be nearly impossible in this setup, for various reasons:A club needs to have a board, elected by the members. The board members can be elected out of their offices at any time, thereby losing control of the finances
Payment of club officials is tightly restricted, and any surplus being taken out of the club must continue to be used for not-for-profit-endeavours.
A club needs to have a provision in its statutes defining what happens when the club dissolves. Usually the remaining assets would then be donated to another charitable organization. In this sense the notion that club members “own shares” in the club’s assets is not correct.
No club member may receive any more money than what he payed for initiation when he leaves the club or when the club dissolves.
Well summarised. In a German club, nobody can gain any personal financial benefit from being in that club, neither the board members nor the ordinary members. The only tangible benefit members can get is by pooling their financial resources they gain access to opportunities they would not otherwise have.
That can be quite easily explained with flying clubs: A single working class German could not afford an aircraft, but 100 of them organised in a flying club can easily purchase new aircraft with their club membership fees alone (and subsequently use them at a discounted rate).
As tschnell said, the laws and rules governing how such clubs are organised would prevent the kind of prepaid-fraud scheme from Peter’s OP.
Peter wrote:
This topic is whether it is possible to sink the operation and cause prepaying customers (ok; you can call them “members” which sounds warmer) to lose money
In Germany flying clubs are usually operated as non-profit-organizations and very strict rules regarding governance and structure must be followed. In return, various tax exemptions apply and some limited public funding may be available.
A prepaid-fraud scheme would be nearly impossible in this setup, for various reasons:
LeSving wrote:
So it IS possible for an association to go bust, meaning the members cannot be liable for debts. Even so, no aeroclubs have gone bust AFAIK.
The Swedish central organisation for aeroclubs (The Royal Swedish Aeroclub) doesn’t know of any cases either.
Airborne_Again wrote:
In a Swedish club, the members are not liable for the debts of the club.
I think that’s the case in Norway as well actually. Did a google search and found only two associations that had gone bust. One of them was a dog association, and the reason was the leader of the board had stolen money from the club over several years, ending up in the club going bust and a lawsuit, which ended in a conviction. Some member of the board stealing money is much more common it seems, ending in a conviction without the club going bust.
So it IS possible for an association to go bust, meaning the members cannot be liable for debts. Even so, no aeroclubs have gone bust AFAIK.
Peter wrote:
I simply cannot see how customers losing money can be prevented while accepting deposits in return for cheaper training or flying
You can look at it as pure marketing. You need the customer to pay X per hour, so you offer a pre-pay plan for X per hour. Then you offer a pay per flight for X+Y per hour. Maybe add in some “benefits” for each one. What looks like cheaper hours really isn’t, and what looks like ordinary price is in fact more.
We’ve already done the “I am not a school, I am a club, and therefore I am nicer” discussion 
This topic is whether it is possible to sink the operation and cause prepaying customers (ok; you can call them “members” which sounds warmer) to lose money.
Note that I am not suggesting the above school was “sunk”. I know the proprietor and I am sure there was no such intent; the circumstances became very difficult, as we all know. But plenty of schools, UK and elsewhere, have been sunk in order to do a runner.
I simply cannot see how customers losing money can be prevented while accepting deposits in return for cheaper training or flying. I would suggest that saying that it is impossible is just wishful thinking. The only way you could do it is by putting the money into some sort of legal escrow and then you can’t use it as a general source of cash for your business. The fact (very obvious to anybody who has hung around the flight training scene for more than 5 minutes) that it is traditional in flight training to live hand to mouth merely amplifies the issue.
Graham wrote:
True clubs (i.e. almost universally not flying clubs)
Although most gliding clubs are “true clubs”. While they may be incorporated, and may have to make a small operating surplus (after all you need something in the bank in case you need to replace some equipment), they are run by the members and for the members, including having their own EASA 66L mechanics who are also members and volunteer to work on the gliders.
lionel wrote:
Well, since (according to LeSving) every member is liable for the debts of the club, the only way that a creditor would loose their money is that every single member would have to enter personal bankruptcy (or the creditor decides that the costs of pursuing them are bigger than the debt owed to them).
That, at least, is different in Sweden. In a Swedish club, the members are not liable for the debts of the club.
Emir wrote:
It’s hard to believe that it’s defined by law like that. In Croatia Ltd. companies
<shrug> other countries also have structures where (some of) the members/shareholders have unlimited liability. E.g. the general partner in a UK/USA partnership or in a French/Luxembourgish/Belgian “société en commandite simple”, or in a French/Luxembourgish/Belgian “société civile”.
Obviously, these kind of structures are not often chosen, unless all members are themselves limited liability companies (for stuff like joint ventures).
People usually choose a structure that gives them limited liability, such as (UK) a company limited by guarantee or by shares, (USA) a corporation or LLC, (FR/BE/LU) a “société à responsabilité limitée” or “société anonyme”
or …
lionel wrote:
Well, since (according to LeSving) every member is liable for the debts of the club, the only way that a creditor would loose their money is that every single member would have to enter personal bankruptcy (or the creditor decides that the costs of pursuing them are bigger than the debt owed to them).
It’s hard to believe that it’s defined by law like that. In Croatia Ltd. companies are liable up to the amount of founding capital (minimum is some €3.000) and owner’s liability doesn’t exist at all. The company can have huge debt and if no funds on account and/or no assets, it will bankrupt but that won’t be a problem of any of company’s owners.
