Repossession and Insolvency

- The UK has decided to override existing insolvency law by adopting Alternative A of Article XI of the Protocol. Where a creditor has a correctly registered its international interest, the adoption of Alternative A will oblige an airline either to return the aircraft to the creditor within 60 days or to cure the breach of contract in which case it may retain the aircraft. Alternative A is therefore seen to assist creditors and promote cheaper funding and lease rates which has, in the Government’s eyes, outweighed the rescue prospects provided to an airline by the existing administration regime.

Taking security and “Blue Sky”

- As confirmed in the now well-known Blue Sky case, English common law applies the principal of lex situs test in relation to the creation of security over moveable assets (including an English law mortgage over aircraft) which requires the aircraft is required to be in England (or in English airspace) or in another jurisdiction whose domestic laws recognise the creation of an English law mortgage at the time the security is created.