What happens when a lifetime membership club files bankruptcy?
If a Lifetime Membership Club files bankruptcy and the club is sold, you may not have a membership at all.
As an example, a golf club (Sea Oaks Country Club – NJ) https://www.thesandpaper.net/articles/sea-oaks-country-club-and-golf-course-reverts-to-atlantic-homes/ filed for Bankruptcy and the assets were sold.
The purchaser bought the assets during the bankruptcy. The new owner was not obligated to pay back or honor the existing lifetime memberships.
What was the result? 67 individuals paid $50K to $60K for their lifetime membership (WOW approximately $4 million). Keep in mind, when a business is sold during a bankruptcy, the results are very different. The debtor probably would not assume existing membership contracts.
In essence, the Golfers hit a “DUFF” and buyer scored tremendously.
New Golf Club owner “ACED” his shot.
All the lifetime club memberships had no rights to the Club at all. I am sure you have not thought about what happens to your lifetime membership in a club that files bankruptcy. As more and more businesses file bankruptcy, you should. Do you want to become a stock holder of a company that goes out of business? Essentially when you pay your lifetime membership fee, you are a financial part of that club.
Be careful when you sign up for those lifetime club memberships. You should review the risks with a bankruptcy attorney Ralph A. Ferro Jr, Esq. | NJ Bankruptcy Law Firm.
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