3. Aircraft Debt Finance

3.1 Structuring
Restrictions on Lending and Borrowing

There are no restrictions on foreign lenders financing an aircraft locally, nor on borrowers using the loan proceeds.

Effect of Exchange Controls or Government Consents

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.

Granting of Security to Foreign Lenders

Borrowers are permitted to grant security to foreign lenders.

Downstream, Upstream and Cross-stream Guarantees

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.

Lenders’ Share in Security over Domestic SPVs

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.

Negative Pledges

A negative pledge is recognised.

Intercreditor Arrangements

There are no material restrictions or requirements imposed on intercreditor arrangements.

Syndicated Loans

The concept of agency and the role of an agent (such as the facility agent) under a syndicated loan is recognised.

Debt Subordination

Debt subordination is permissible and recognised.

Transfer/Assignment of Debts Under Foreign Laws

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.

Usury/Interest-limitation Laws

There are no usury or interest limitation laws.

Click here to continue reading this article.

Stay current with our latest legal insights and subscribe today