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There are no restrictions on foreign lenders financing an aircraft locally, nor on borrowers using the loan proceeds.
There are no exchange controls or government consents that would be material to any financing or repatriation of realisation proceeds under a loan, guarantee or security document.
Borrowers are permitted to grant security to foreign lenders.
Downstream, upstream and/or cross-stream guarantees are permitted in favour of lenders. There are no consideration or corporate benefit or registration requirements. However, directors must act in the best interests of the Company and, if there is any doubt as to whether the guarantee is in the Company’s best interest, it can be whitewashed by resolution of the members.
It is advisable for a lender to take share security over a domestic special purpose vehicle (“SPV”) that owns the financed aircraft. A charge over the shares of a domestic SPV is recognised.
A negative pledge is recognised.
There are no material restrictions or requirements imposed on intercreditor arrangements.
The concept of agency and the role of an agent (such as the facility agent) under a syndicated loan is recognised.
Debt subordination is permissible and recognised.
The transfer or assignment of all or part of an outstanding debt under an English or New York law-governed loan is permissible and recognised.
There are no usury or interest limitation laws.
This article was first published in Chambers and Partners.