Financing and deregistration

Is there a requirement for a governing law of mortgage?

No.

What is most common choice of law for financings?

English law.

Can financiers file a priority notice of their interests?

Yes. The priority notice is valid for 14 working days. The day of entry is counted as the first day. The end date is 16:00hrs of the 14th working day. The priority notice then expires at the end of the 14-day period unless it is followed up with a further priority notice, or the entry of the aircraft mortgage.

Can financiers file a Deregistration Power of Attorney/Irrevocable Deregistration Power of Attorney (IDERA)?

Yes, the registered owner can file an IDERA by completing a CA50 IDERA request form subject to meeting the below prerequisites. The fee for the recordation of an IDERA is £111.

Prerequisites

A request to issue an IDERA must:

• Not be made in connection with a right or interest that already existed on the date when the Cape Town Convention came into force in the UK, ie 1 November 2015 – see The International Interests in Aircraft Equipment (Cape Town Convention) Regulations 2015 Art 51
• Be in relation to an “international interest” which was both created on or after November 1st 2015 and is registered at the International Registry of Mobile Assets
• Be in relation to an aircraft that is covered by the Cape Town Convention and Protocol. Only one IDERA can be recorded and current at any one time for a single aircraft.

The entity named as the Authorised Party in an IDERA can designate a Certified Designee under that IDERA to act as its delegate by submitting a form CA52 IDERA designation form. There can only be one Designation in place at any one time. The Authorised Party can revoke the IDERA or remove the Designation without reference to the Certified Designee by using the appropriate form.

In the event of a default, the Authorised Party or Certified Designee of an IDERA can request the deregistration of an aircraft by completing and submitting the CA54 IDERA deregistration request form subject to the below prerequisites.

Prerequisites

• Deregistration will normally be actioned within three working days. However, the aircraft must remain registered for the Export Certificate of Airworthiness (Export CoA) to be issued and therefore deregistration may be delayed if an Export CoA is required. It is therefore essential that the deregistration request is only made once the aircraft is ready to be deregistered
• If, at the time of the IDERA deregistration request, a registered mortgage is currently entered on the UK Register of Aircraft Mortgages that was created prior to 1 November 2015, the mortgage must be discharged or the mortgagee must consent in writing to the deregistration of the aircraft. However, if a registered mortgage is currently entered on the UK Register of Aircraft Mortgages that was created after November 1st 2015, the consent of the mortgagee is not required prior to deregistration. This is predicated on the earlier declaration on registered interests having been made.

The consent of the registered owner or other party on the CAA's registration records is not required. If a party disputes whether the IDERA can be exercised, it must obtain a court order to prevent the CAA from deregistering the aircraft on the basis of the IDERA.

To revoke an IDERA, the Authorised Party must submit the CA51 IDERA revocation form. The Authorised Party can revoke the IDERA without reference to any Certified Designee when a designation has been made.

Is there a public mortgage registry?

Yes, the UK Register of Aircraft Mortgages. A search of the Register will reveal whether the aircraft is the subject of any registered mortgages. Basic information on whether an aircraft is the subject of a registered mortgage is also given on the G-INFO site against each aircraft. However, to get full information on any registered mortgages, a mortgage search of the Register must be carried out. The search includes details of the registered owner, any mortgages entered on the UK Register of Aircraft Mortgages, the parties involved, and the date and time of entry.

Is it easy for financiers to perfect a mortgage?

Yes. See the answer above regarding mortgage registration at the Register of Aircraft Mortgages.

In addition, where the mortgage is created by a company or limited liability partnership incorporated in the UK, the mortgage must also be registered at Companies House within 21 days of its creation. This is a simple process that can be carried out by filling out a short online form, uploading a certified copy of the mortgage and paying a fee of £15.

Where the mortgage is also a “security agreement” under the Cape Town Convention, it should be registered at the online International Registry. The UK allows parties to deal directly with the International Registry site without levying any fees on its own account for International Registry registrations. So, the fees and processes involved are standard for the vast majority of jurisdictions that have ratified and implemented the Cape Town Convention without making their jurisdiction an “Authorising Entry Point” jurisdiction (such as the UAE) or a “Designated Entry Point” jurisdiction (such as the US).

How long is the period during which a moratorium may be imposed in the event of a lessee or borrower insolvency?

The UK has ratified and implemented the Cape Town Convention and its Aircraft Equipment Protocol (together the Cape Town Convention). Under the terms of that ratification and implementation, where the lease or (as applicable) security agreement concerned creates a Cape Town Convention international interest over the aircraft that has been registered at the International Registry, there is a maximum period of 60 days after the beginning of the lessee's or (as applicable) borrower's insolvency by the end of which the aircraft must be returned to the lessor or (as applicable) lender. This is because the UK adopted the Cape Town Convention’s Alternative A insolvency regime, with a maximum waiting period of 60 days (together the UK's Alternative A regime).

Where the Cape Town Convention does not apply to an aircraft leased to a UK lessee, or aircraft mortgage given by a UK borrower, and the lessee/borrower becomes insolvent, there is no automatic insolvency moratorium. There is such a moratorium if the lessee/borrower is put into UK administration proceedings. Under this moratorium, however, it is not usually possible for a lessee/borrower in administration to retain possession of a leased/mortgaged aircraft indefinitely without making rental payments/loan repayments.

Other insolvency moratoria apply in the UK in a limited number of specific circumstances, but these are of increasingly marginal interest given the terms of the UK's Alternative A regime. The same applies to the moratorium in administration mentioned above, which (for post November 1st 2015 transactions) will usually be overridden by the UK's Alternative A regime.

In the case of bankruptcy or insolvency are aircraft typically deemed to be part of the lessee’s property?

No.

Does the registry/aviation authority require a notarised/authenticated document to de-register an aircraft?

No.

What are the requirements for deregistration of an aircraft?

There is no fee for the deregistration of an aircraft unless the Same-Day service is requested.

Using a Certificate of Registration to deregister an aircraft – the section on the reverse of a Certificate of Registration should be completed instructing the CAA to remove the aircraft from the UK register. If the request for deregistration is urgent, both sides of this document can be faxed or scanned and emailed to the CAA Aircraft Registration Section.

Using a Sale Notification Form to deregister an aircraft – if the Certificate of Registration is not available, a Sale Notification Form should be used instead.

Following deregistration, the CAA will send written confirmation that deregistration has taken place to the registered owner and, in the case of aircraft which are to be re-registered abroad, the CAA will also send fax confirmation to the new state of registry.

As a consequence of deregistration, any CoA or permit to fly in force over the aircraft will be automatically suspended and revoked.

Aircraft to be re-registered abroad

Once an aircraft has been sold to an entity outside the UK, a request for deregistration should be made immediately.

Mortgaged aircraft

To be removed from the UK Register and re-registered abroad:

· an aircraft must be clear of registered mortgages

· the mortgage holder must have consented to the aircraft being deregistered.

Aircraft subject to an IDERA

The IDERA must be revoked before the aircraft can be deregistered.

Once an aircraft is removed from the UK Register, it can no longer fly displaying its UK nationality and registration marks.

The UK-assigned Transponder Mode S 24-Bit Address must also be removed from the aircraft at the time of deregistration. Failure to do so could result in unsafe flying conditions if the aircraft flies again under a different registration.

What are the requirements for deregistration of mortgage?

A completed Discharge of Aircraft Mortgage form along with the discharge document will need to be sent to the CAA Aircraft Registration section.

There is no fee for the registration of the discharge of an aircraft mortgage.

Mortgages are deemed to have been discharged from the date and time of receipt by the CAA (subject to the opening hours of the UK Register of Aircraft Mortgages, 10:00 - 16:00 weekdays) and not when the mortgage itself was completed.