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Court Finds That Payment on Aircraft Lease Security Deposit Letters of Credit Would Not Have Violated the United Kingdom's...

Key Points - - A court in London has ruled that the London branch of a German bank, which had issued confirmations of letters of credit issued by a Russian bank as security provided by Russian airlines for leases of...more

Leased Aircraft Stranded in Russia: A Survey of the Pending Insurance Claim Litigation in Different Jurisdictions

Key Points - - Insurance companies are bracing themselves for years of legal disputes over liability for total losses claimed by lessors to aircraft stranded in Russia as a result of sanctions over Russia's invasion of...more

US Moves to Seize Aircraft for Apparent Violation of Export Controls

Key Points - - The US Department of Justice reported that it obtained a warrant for the seizure of a Boeing 737-7EM aircraft for the alleged violation of US export controls on Russia (rather than because of ownership of...more

Features of the Hong Kong Airlines Restructuring Plan

Key Points - - Hong Kong Airlines (HKA) has announced that it is seeking to implement a restructuring of its aircraft lease obligations and other liabilities by court action in the UK and Hong Kong. - The plan...more

Protecting the Financer of the Conversion of a Passenger Aircraft to a Freighter

Key Points - - The rights of an aircraft lessor or lender financing the conversion of a passenger aircraft to a freighter aircraft will be specified in agreements between the borrower, financer and conversion facility....more

BIS Identifies First Foreign-Produced Commercial Aircraft Exported to Russia in Apparent Violation of US Export Controls

Key Points - - In an August 2 press release, the US Commerce Department updated its list of aircraft that have flown into Russia or Belarus in apparent violation of Export Administration Regulations by adding the first 25...more

Aircraft Lessors Should Prepare for UK Restructuring Processes

Key Points - - The use by Malaysia Airlines' subsidiary, MAB Leasing Ltd. (incorporated in Malaysia) ("MABL"), in 2021, of an English Scheme of Arrangement (a "Scheme") to compromise its aircraft lease obligations proved...more

BIS Grants Authorization of Aircraft to Leave Russia and Updates List of Aircraft Operating in or to Russia in Violation of Export...

Key Points - - In a March 30 press release, the US Commerce Department updated its March 18 list of aircraft that have flown into Russia in apparent violation of Export Administration Regulations by adding 73 aircraft and...more

Commerce Department Identification of Aircraft Exported to Russia in Violation of Export Controls Offers Guidance on Whether the...

Key Points - - A recent Commerce Department Press Release clarifies that the Department's restrictions on aviation exports to Russia issued in the wake of the invasion of Ukraine apply to whole aircraft, and not just to as...more

Avoiding Flight Schedule Disruption When Replacing the Owner Trustee of a Leased Aircraft Registered in the United States

Key Points - - Replacing the owner trustee of a US-registered aircraft that is on lease requires submitting a new application to register that aircraft. - Submitting the application to reregister the aircraft restricts...more

What a Lessor and Secured Lender Should Expect From an Opinion Letter of Local Counsel in a Cross-Border Lease

The leasing of a commercial aircraft to an airline in a foreign jurisdiction presents risks to the lessor and its secured lender, including whether an aircraft may readily be repossessed if a lease event of default occurs....more

Buyer Due Diligence in Acquisitions of Leased Aircraft: Lease Document Review and Seller and Lessee Representations

Key Points - - Populating a template lease summary is an effective way to confirm significant commercial, legal and technical provisions in lease due diligence. - Comprehensive seller and lessee representations may be...more

Structuring and Practice for Aircraft Leases to Prevent Lease Payments From Being Clawed Back in a Lessee Bankruptcy

Key Points - The risk that prepetition lease payments made by a lessee that is a debtor in a US bankruptcy will be clawed back from an aircraft lessor can be reduced if: - the lease is a true lease rather than a...more

The Desirability of Registering a New International Interest When Extending the Term of a Lease

Introduction This Aviation Advisory considers the desirability of registering a new international interest at the International Registry corresponding to the extension of the term of a lease of an aircraft, airframe or...more

Protecting a Lessor Against the Recharacterization in Bankruptcy of a Full Payout Aircraft Lease as a Disguised Security Agreement

Often an aircraft financer will structure a secured aircraft loan as a full payout lease in order to facilitate the exercise of remedies in the case of a default by the borrower airline. Specifying that the lease is governed...more

ADS-B OUT Compliance as Part of Lease Redelivery Conditions

Countries around the world are putting in place a more accurate system of tracking aircraft in the skies called Automatic Dependent Surveillance-Broadcast (ADS-B). This technology will eventually replace radar as the primary...more

Maximizing Returns Through Effective Management of Engine Performance Restoration: Five Cases

An important source of income for an aircraft lessor is maintenance reserve payments or equivalent end-of-term return compensation for engine overhaul or performance restoration. This is particularly true if the lessor can...more

Toward a Rational Debt-Equity Framework in Leveraged Aircraft Leases

A non-recourse leveraged lease presents issues of how much say an equity investor or sponsor — as opposed to the secured lender — should have against a defaulting lessee airline. There is no definitive template. Each...more

Aircraft Sale Leasebacks in a Disrupted Market: Traditional and New Considerations for Lessors

In the current market, the sale-leaseback can be an effective tool for airlines to raise cash, transition an aircraft model out of the fleet, or manage residual-value risk. For example, it has been reported that (1) Southwest...more

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