Traditionally, aircraft leasing companies incorporate a separate company in respect of the purchase and lease of each aircraft in their portfolio. For larger leasing companies this could mean that they have dozens of companies which they then need to manage and administer, with the accompanying associated costs.
What options are there? One that is often considered is the use of a trust, but that can create issues as the concept of a trust itself may not be familiar in jurisdictions where their lessees operate and is subject to common law and statutory law quite different from company law.
Bermuda has two options that could offer more cost efficiency and administrative ease.
The first is a segregated account company. Bermuda segregated account companies (SACs) are well known and widely accepted structures used by Bermuda insurance companies and investment funds. The benefits they offer include operational efficiency, flexibility and the secure ring-fencing of assets and liabilities between segregated accounts. Such benefits can be equally advantageous to the aviation sector, with the Bermuda SAC a useful vehicle for aircraft holding.
A segregated accounts company is a company that has the statutory power to create an unlimited number of accounts which are legally segregated from the other accounts within the SAC and from the SAC’s general account (which comprises the assets and liabilities that are not otherwise linked to a segregated account). The establishment of a segregated account does not create a separate legal entity distinct from the SAC. Any asset linked by the SAC to a segregated account is held exclusively for the benefit of the segregated account owners and any counterparty to a transaction linked to that segregated account. Similarly any liabilities arising from a transaction in respect of a particular segregated account may only be satisfied out of the assets linked to that segregated account. When entering into contracts, SACs must state specifically that they are acting in respect of the relevant segregated account.
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Need a Better, More Cost Effective Way of Owning Multiple Aircraft?