July 29, 2022
Bankruptcy: On July 21, 2022, the Club emailed a letter to all members announcing that (1) the Club had suspended operations and grounded its aircraft, and (2) there would be an “emergency meeting” of the membership regarding this action the next evening, July 22, 2022 at 7:00 PM via Zoom. Less than a week later, on July 26, 2022, the Club filed Chapter 11 Bankruptcy.
Lack of PBFC Director Identification: The Club’s July 21, 2022 letter purports to be from the “Board of Directors, Pompano Beach Flying Club” but does not identify the Directors by name or even the Club President. Based upon the publicly available Club’s Annual Report filed on January 31, 2022 with the Florida Secretary of State, the Club’s Board of Directors and Officers are listed at the bottom of this article. However, the last page of the Club’s bankruptcy filing is a document titled “Statement Regarding Authority to Sign and File Petition” that was signed by a different Club Secretary whose appointment has apparently not been reported to the State of Florida as required by law. That name too will be listed at the bottom of this article.
Full Disclosure of Intent to Declare Bankruptcy: Because we have not yet seen any Board meeting minutes, we do not know what the vote was, if any, on the motion to suspend operations, ground the aircraft, and call for an emergency meeting. We do know that a course of action was proposed by the Club leadership and subsequently adopted by at least some of the membership to assess all Club members $165/each in order to retain a bankruptcy attorney, but we have not yet seen any Club meeting minutes about that either. We also now know that the Club filed for Chapter 11 bankruptcy just two business days following that Club meeting, so there was apparently little discussion with the bankruptcy attorney or subsequent feedback to the membership. Given the very short interval from the Club membership meeting to retaining counsel to filing bankruptcy, it seems the Club leadership was more committed to pursue bankruptcy than they led the membership to believe on July 22, 2022.
Conduct Unbecoming: Given the stakes – and that a Federal Judge at the United States Bankruptcy Court for the Southern District of Florida – or a Trustee appointed by the U.S. Trustee Office – will soon be closely examining every detail of the Club’s recent conduct – the July 21, 2022 letter represents extraordinarily unprofessional form unbecoming of corporate officers. The unnecessarily hostile and argumentative rhetoric in the letter is shocking. It should be remembered that Greg Gilhooly, Tor Holm, and Greg Galyo were the three members who engineered a “hostile takeover” of the Club just over two years ago, and they have all been at the center of Club management since. Almost immediately after taking control in February 2020, the new leadership established the unfortunate position that the Club was free to default on any and all of its financial obligations. They abandoned decades of past practice when they suddenly claimed that no one would ever receive their “buy in” refund (a.k.a. Membership Fee) due when the member resigned from the Club. Their formula for business “success” apparently centered on dishonoring the Club’s financial obligations. It seems possible, if not highly probable, that this dishonorable behavior is the root cause of the Club’s problems today.
Loans to the Club: Unfortunately, the membership (who are legally “shareholders” of the corporation) didn’t seem to be paying much attention to what was happening in the wake of that February 2020 Club election. In March 2020, a month of taking office, the new leadership took the first steps in a litigation strategy to sue former Treasurer Carl Kennedy to obtain Club records they argued they could not run the Club without. The Board voted to obligate each Director to loan the Club enough money to retain an attorney, Edward Holodak, for the purpose of suing Kennedy. It is relevant to note the hypocrisy of receiving money through such informal loans. After all, this same Board of Directors has spent over two years berating Kennedy in court and Club proceedings for using similar informal means to secure funds for the Club’s operation.
Let the Lawsuits Begin! Immediately after retaining counsel, on March 19, 2020, the Club’s new attorney sent Mr. Kennedy a “demand letter” seeking an accounting and other records. Less than three weeks later, on April 7, 2020, the Club filed a lawsuit against Kennedy ostensibly to obtain what they had demanded on March 19, 2020, claiming they did not possess these documents. The Board did not have the informed consent from the shareholders for their actions, nor did they disclose any “return on investment” or financial gain they anticipated by suing Mr. Kennedy. Even worse, this new Board of Directors never disclosed any forecast for legal costs – now known to be in the tens of thousands of dollars – to engage in legal actions against Kennedy. These extraordinarily high costs were all paid out of Club assets, meaning they were funded by shareholder dues or higher aircraft rental rates (i.e. the membership was paying these legal bills). Even though expenses incurred after July 26, 2022 will be subject to review by the Bankruptcy Court, the members/shareholders will continue to pay for the impact of the Club leadership’s questionable business decisions.
Abuse of Judicial Process: Once initiating their lawsuit against Kennedy, the new Club leadership and their attorney quickly began levying all manner of threats and accusations against Kennedy, filing one motion after the next, one amendment after the next, including making malicious and slanderous accusations that Kennedy had misappropriated (stolen) money from the Club. These are allegations of criminal conduct that Broward County Circuit Court Judge David A. Haimes long ago firmly admonished the Club (during a hearing on November 17, 2020) were not proper in a civil lawsuit against Kennedy. The Judge went on to inform the Club’s attorney and the Board of Director members present that, if they had reason to believe Kennedy had stolen money from the Club, they should report that to “the authorities.” That was nearly two years ago and no such report to “the authorities” ever occurred, so it stands to reason neither the Club’s Board of Directors or their attorney have any foundation in fact(s) supporting their defamatory rhetoric.
Lack of Disclosure the Club Had Hired an Accountant: What Judge Haimes did not know on November 17, 2020 (and may not know to this day) is that the Club Board of Directors had already hired a special accountant at yet another substantial expense to Club shareholders. The Club apparently hired this accountant in the hopes he would dig up dirt of “misappropriation” by Kennedy, but that consultation apparently died on the vine without producing a shred of evidence against Kennedy that could be reported to “the authorities” for prosecution.
The Treasurer Denied Knowing who the Accountant Was: The Treasurer’s Report at a membership meeting on November 11, 2020 (conducted via Zoom due to COVID-19) exposed the Club leadership’s continued path of concealment and dishonesty. Club member Kennedy asked the Board of Directors for details of an ambiguous $4,000 expense. The Club’s Treasurer, Andrew Bilukha, ultimately admitted that $4,000 had been spent on an accountant, but Bilukha was unwilling to provide any details about the accountant’s work, and claimed he did not even know the name of the accountant to whom he had just paid $4,000 of the Club’s money. We have found no record the Board of Directors ever informed the shareholders of their intent to spend $4,000 for an accountant, let alone why this accountant had been retained or what he found. Although Bilukha pledged to immediately identify the accountant to all shareholders following that membership meeting, and provide the accountant’s report to the membership, he did neither. It seems evident that, $4,000 later, this mysterious unnamed accountant found nothing to support the Club leadership’s ceaseless persecution of Carl Kennedy. On May 3, 2021, the Club’s new Vice President, Greg Worley (appointed by the Board of Directors rather than elected by the membership), sent an email to the membership announcing that Bilukha had just resigned and did not include any explanation from Bilukha. Instead, Bilukha quietly disappeared from the Club leadership without explanation, although he has apparently remained a member.
Unreasonable and Improper Demands: In spite of the fact the Club leadership was holding an apparently empty bag of allegations against Kennedy after spending $4,000 on some super accountant that they had no doubt hoped would hand them a smoking gun, they doubled-down on their tactics. The Club continued, and even expanded, their claims against Kennedy. They menacingly claimed Kennedy must immediately turn over the following documents because he had no lawful right to keep them and that the Club could not operate without them:
- The Club’s By-Laws, in spite of the fact the By-Laws were already available, and have continuously remained freely available to anyone in the world, on the Club’s web site (just like the Club’s Operational Rules).
- The Club’s Articles of Incorporation, which have always been a matter of public record with the State of Florida, and thus freely available to anyone in the world. For whatever reason, the Club continues to not provide the Articles of Incorporation on its web site, arguably denying shareholders easy access to key governance documents. The Club’s Articles of Incorporation are available here on our website.
- Stock certificates, in spite of the fact the By-Laws explicitly state that “No Stock Certificates will be issued,” so the Club’s Board of Directors and attorney knew – or should have known – that they were expending costly legal resources demanding documents that do not exist (See By-Laws Article V, Section 1.)
- Membership lists have been continuously administered and controlled using the Club’s electronic database (via “timesync.com,” an integral component of the Club’s ScheduleMaster™ services). Passwords to administer the membership database were immediately provided to the new Board of Directors after they were elected on February 12, 2020, and the Directors have had full administrative control ever since. Additionally, the By-Laws assign authority over these Club records to the Secretary, not the Treasurer, so the Club’s costly legal demand for membership lists was made to the wrong person.
- Meeting Minutes for Board of Director and Shareholder meetings are not Treasurer’s responsibility. Again, the Club’s ccostly legal demand was made to the wrong person because the By-Laws unequivocally establishes that the Secretary keeps the minutes, not the Treasurer: “The Secretary shall keep the minutes of the meetings of the Board of Directors and of the Stockholders in appropriate books.”
These are just a few examples illustrating how misguided the Club leadership and their lawyer have been in pursuing Kennedy. The Club leadership has repeatedly failed in performing due diligence, perhaps because they were only wasting the shareholder’s money, not their own. They seemed blinded by inexplicable and unwarranted rage such that they turned a simple records request into what has become a very costly, expansive, full-blown inquest, all clearly fueled by ill-informed, emotional, and irrational contempt for Kennedy. It also demonstrates the Club Directors’ irresponsibility in authorizing wasteful expenditures pursuing documents and information the Club already had, other former officers had been responsible to maintain, or – like stock certificates – simply did not exist.
Running Up the Club’s Legal Expenses: While the Club was busy suing Kennedy ostensibly to seek an accounting and records, most of which the Club already had, the Club also used the same attorney trying to defend the Club against lawsuits brought in pursuit of just debts. These lawsuits only came after the Club denied the validity of the debts they had willfully chosen to default on. So far, the Club has lost three of the four of these lawsuits against them, with one still pending. Along the way, in addition to accusations the Club failed to pay its debts, the Club and attorney were repeatedly accused of lying and misrepresenting. We have heard there have been multiple complaints to the Florida Bar alleging improper conduct by the Club’s attorney.
“Do As We Say, Not As We Do.” We also cannot help but observe the unfortunate irony in the Club’s current predicament. While the Club’s leadership remains steadfast in their view that nothing is ever their fault, even the most unsophisticated analysis allows one to connect all the dots from today’s alleged financial distress back to the Club leadership’s decisions beginning in February 2020.
Who Gives Anyone $100,000 for Nothing in Return? After a May 26, 2022 Final Summary Judgment against the Club of $117,627.24 (the Sunwood lawsuit, which may never have come about had the Club leadership just met with Sunwood to negotiate payment of a $100,000 loan they said they were not aware had been made to the Club), the Club leadership remains in denial. Even after total loss of the case, the current Club leadership still pretends this was not a loan and that – somehow – the Club has no obligation to repay money they admit was deposited into Club accounts. Unless they are just plain dishonest, they seem to be disconnected from reality. Even after losing three cases in a row (with a fourth loss likely in the “on deck circle”), it seems the current Club leadership knows no limit when it comes to dishonesty and will blindly pursue “success” by constantly ignoring the facts and blaming everybody else for their decisions to default on the Club’s obligations.
Spending $100,000+ on a Lawyer Was Probably the Only “Misappropriation of Funds.” The Club leadership cannot deny that, instead of their decision to spend over $100,000 on an attorney to defend the Club’s dishonorable defaults on its obligations, they could have negotiated a payment plan with Sunwood and others that would not have placed the Club into the peril it is today. After all, if they were willing to write blanks check for some $100,000 or more to a lawyer to engage in unprecedented litigation actions opposing creditors and even the Club’s own members, they surely had the ability to pursue a more rational and honorable outcome by establishing viable payment plans that would retain normal operation and control of the Club. Instead, the Club leadership has paid out significant money to an attorney who has already lost all the closed cases. Despite the fact those unprecedented legal expenses caused them to lose control of the Club in bankruptcy, they are still pointing the finger at everyone else.
Intervention is Warranted. It seems long overdue for the Club’s shareholders to intervene and critically evaluate the wisdom and effect of the Club leadership’s decisions to default on debts in the first place. Maybe the shareholders could also evaluate the wisdom of paying an attorney $100,000 to seek records and information the Club largely already possessed on the basis that that the Club could not continue to operate without the records they sought. This critical evaluation is especially necessary because, despite their claims otherwise, the Club was able to continuously operate just fine. They continued to operate right up to the point where their approval of expensive accountants and outlandish legal bills finally ran things into the ground. It would seem this Club leadership brought these problems onto themselves, so it is they who should be held accountable for their actions, not unwitting creditors or former officers who have been gone for years. There is also a strong argument to be made that no attorney would have ever been necessary had the Club leadership demonstrated even a modicum of respect for the Club’s long history of success through honor, ethics, and even the informality of some arrangements.
$165 Assessment Per Member is Just the Beginning. Moving forward, the Club is being represented in its Chapter 11 bankruptcy case by attorney Craig A. Pugatch (which may be news to many members). While the acts of researching bankruptcy funded by a $165 per member assessment apparently passed muster during the Club’s emergency Zoom meeting on July 22nd, it is not clear if a shareholder quorum was present as required by the By-Laws or if the meeting complied with other Club policies. Regardless, the walls of the box canyon into which the current Club leadership is flying are rapidly filling up the windshield, and yet they have the audacity to ask you to allow them to remain at the controls. Unbelievable. If the shareholders don’t take immediate action, they will have only themselves to blame.
Divide and Conquer: One other consideration is that the Club is now effectively made up of two classes of shareholders: Members of the Club who joined prior to May 2020 that tendered capital in the form of a $1,700 fully-refundable “buy-in” Membership Fee (i.e. “Legacy Members”), and those joining after May 2020 who tendered a $500 Membership Fee of which only one dollar was deemed fully-refundable when they resigned (i.e. “New Members”).
- At least two former Legacy Members sued the Club after the new Membership Fee change was made to the Operational Rules and retroactively applied onto Legacy Members, whereby their fully-refundable $1,700 Membership Fee had effectively been confiscated. These two former Legacy Members eventually received their “buy-in” refund through court action. What this means is that all former and current Legacy Members could (and perhaps should) file claims as Unsecured Creditors in the current bankruptcy proceeding. Federal Bankruptcy Court certainly seems like an appropriate forum to test the legality of the Club leadership’s previous declaration that, after May 2020, all buy-ins tendered by Legacy Members would never be refunded. In essence, most Legacy Members can argue they are Unsecured Creditors because the Club improperly seized $1,700 from them, so they are entitled to representation on the Unsecured Creditors Committee.
- The New Members, on the other hand, have effectively zero capital investment in the Club. It is not clear what would motivate any New Member to remain in the Club paying monthly dues and/or open-ended assessments during bankruptcy, especially when they could become jointly and severally liable if the Club’s debt is assigned to shareholders. Remember, the Club still owes money to people who just want their money back. It would be hard to dispute the reasonable decision of any member to cut and run before waiting for a judge to issue an order holding them responsible to cover the Club’s debts.
The Club Directors Just Relinquished Control. While the Club’s letter infers that filing bankruptcy will allow the current Club leadership to remain at the controls, it is a fact that a Federal Judge or Trustee will have to approve all key steps and the final outcome intended to provide creditors the greatest likelihood of seeing their debts repaid. By invoking bankruptcy in the manner that they have, an action that will unquestionably result in even more costs levied as mandatory assessments upon individual members, the current Club leadership has exposed their ignorance about the bankruptcy process and its associated costs.
Hoodwinking Uninformed Shareholders is No Formula for Success. The current Club leadership apparently hopes the membership will just blindly bankroll yet another expensive legal adventure with no limit on costs. The Club leadership seems to have persuaded the membership that bankruptcy will allow the Club to quickly be back up and running and the current Club leadership will retain control of the Club. It seems that, once again, the current Club leadership believes they can just flip a switch (assess the membership to hire more lawyers) and all will be back in their control. This is wrong on too many levels to count. Very wrong.
There is a New Pilot in Command: The Honorable Peter D. Russin. Whatever claims the current Club leadership may make as to debts, their causes, and ability to control the Club after declaring bankruptcy, all financial obligations and operational decisions will now be scrutinized and approved (or rejected) by a Federal Judge or Trustee during what will unquestionably be substantial and costly legal proceedings. In other words, on the day the Club declared bankruptcy (July 26, 2022), the Board of Directors effectively surrendered the right to operate the Club as they see fit. Everything will now be decided by the Honorable Peter D. Russin, a Federal Judge in the Federal Bankruptcy Court for the Southern District of Florida, or the now-appointed Subchapter V Trustee, Carol Lynn Fox. In fact, the Club’s bankruptcy counsel, Craig Pugatch, has already asked to the Court to approve his law firm’s employment by the Club to pay him out of the new “Debtor in Possession” accounts. This suggests that the Court will also be scrutinizing the alleged business purposes for any further employment of, and payments to, Edward Holodak or others involved in any pending or future litigation. The membership deserves to be fully and truthfully informed about all this, as well as the fact they may be on the financial hook not only for the costs of running the Club, but also all expenses for administering the protracted and costly bankruptcy process (read: even larger assessments are likely coming). Those new expenses would all be paid to lawyers, courts, banks, and other creditors, but absolutely not going toward improving or maintaining aircraft for the benefit and use of the Club membership.
We will continue to monitor and report as best we can, but if anyone has information we should know about and report on (such as Club communications), please send an email to webmaster@pompanobeachflyingclub.info and we will consider that information.
Board of Directors and Officers of Pompano Senior Squadron Flying Club, Inc, as of Jan 31, 2022.
President/Director: GREGORY GILHOOLY
Vice President/Director: GREGORY GALYO
Treasurer/Director: TOR HOLMSecretary/Director: TYLER FREDERICK*
*Secretary/Director: CASEY AHLBUM
Director: ANTHONY ASTRAY-CANEDA
* From the Jul 26, 2022 Bankruptcy filing.