Basch & Rameh updates

Changes in ANAC procedures create uncertainty in aircraft deliveries
Basch & Rameh
  • Aviation
  • Brazil
  • 27 April 2011

The National Civil Aviation Agency (ANAC) has recently made two changes in its practices that are causing uncertainty and difficulty in some aircraft lease deliveries and redeliveries. As in the past, changes in ANAC practices are subject to review and may be reversed, especially if airlines and other operators raise any problems relating to them. Occasionally, ANAC alters its policies without realising the potential consequences.

Terms of war risk programme still unclear for aircraft financers
Basch & Rameh
  • Aviation
  • Brazil
  • 03 November 2010

After the September 11 2001 terrorist attacks, many governments sought or were required to provide support to their national airlines in bearing the increased cost of insurance against certain war and terrorist risks. In order to deal with this, the Brazilian government passed a specific law providing certain cover to Brazilian airlines. However, the law generates many misunderstandings concerning the risks and parties covered.

Recent changes to filing requirements at the Brazilian Aeronautical Registry
Basch & Rameh
  • Aviation
  • Brazil
  • 04 August 2010

Earlier in 2010 the Brazilian Aeronautical Registry promulgated several changes to its filing procedures that have caused considerable confusion and altered the way in which parties must organise closings. Its objective was to streamline the filing and registration process, and it is hoped that the new policies will result in more consistently applied policies that will help closings to proceed without delays.

Aircraft lessor rights reaffirmed in Brazilian bankruptcy proceedings
Basch & Rameh
  • Aviation
  • Brazil
  • 26 May 2010

Previous court cases have produced precedents that posed a threat to the voting rights of aircraft lessors in Brazilian bankruptcy restructuring proceedings. However, a recent decision by a Sao Paulo bankruptcy court and the initial vote of an appeals court panel indicate a more balanced and beneficial approach, rather than one which follows vague concepts of equity in an attempt to save airlines at any cost.

VarigLog bankruptcy proceedings threaten creditor voting rights
Basch & Rameh
  • Aviation
  • Brazil
  • 02 December 2009

One of the innovations of the Brazilian Bankruptcy Law was to allow airlines to seek bankruptcy restructuring protection. Since the law entered into force in 2005, five Brazilian airlines have sought judicial protection to allow for restructuring - termed 'judicial recuperation' in Brazil. One such case, the VarigLog Case, created precedents that threaten the exercise of creditor voting rights.

Cut-Through Clauses in Aviation Reinsurance Contracts
Basch & Rameh
  • Aviation
  • Brazil
  • 29 July 2009

In 2007 the monopoly that the Brazilian Reinsurance Institute had held over Brazil's reinsurance market for nearly 70 years began to end. Legislation that had been expected for 10 years was finally ratified. Part of that legislation addressed cut-through clauses in reinsurance contracts, which are particularly relevant to aviation contracts given the extent to which risk is reinsured through international reinsurance markets.

New Electronic Title Searches Introduced
Basch & Rameh
  • Aviation
  • Brazil
  • 11 March 2009

A certidão is a printed extract from the records of the Brazilian Aeronautical Registry to determine the ownership and lien status of registered aircraft. For the past few years the time required to obtain certidões has been approximately two months and in some cases even longer. However, the National Civil Aviation Agency has recently greatly improved the issuance system.

Recent Changes to Procedures for Import, Export and Deregistration of Aircraft
Basch & Rameh
  • Aviation
  • Brazil
  • 22 October 2008

The procedures and delays involved in the export and deregistration of aircraft registered in Brazil have been attracting increasing attention over the past year. In the few months that have elapsed since this issue was first addressed in July, changes have been made to the procedures.

Export and Deregistration of Aircraft
Basch & Rameh
  • Aviation
  • Brazil
  • 06 August 2008

The procedures and delays involved in the export and deregistration of aircraft registered in Brazil have been attracting increasing attention over the past year. In many jurisdictions deregistration is a simple formality that requires the completion and filing of a few forms. In Brazil, it is considerably more complex.

Varying Bond Requirements in Brazilian Aircraft Repossession
Basch & Rameh
  • Aviation
  • Brazil
  • 02 April 2008

For tax reasons almost all aircraft operated in Brazil are leased. Financiers new to the jurisdiction need to understand the requirements and procedures for repossession of leased aircraft in case the lessee operator defaults. One of the requirements, which applies to all lawsuits involving foreign plaintiffs, is the posting of a bond.

Registry's Filing, Registration and Certification Requirements in Flux
Basch & Rameh
  • Aviation
  • Brazil
  • 12 December 2007

The Brazilian Aeronautical Code provides that the owner of an aircraft registered in Brazil is the party recorded as the owner at the Brazilian Aeronautical Registry. For the past 12 to 18 months the registry's filing procedures and requirements have been in flux and the changes have presented new challenges to aviation finance lawyers practising in Brazil.

Exporting Aircraft: Airport Charges and Customs Fees
Basch & Rameh
  • Aviation
  • Brazil
  • 05 September 2007

When aircraft owners consider leasing aircraft to new jurisdictions a common due diligence issue is whether charges incurred by the lessee operator can lie in rem against the aircraft if repossessed or returned at the end of a lease term. In Brazil, two sets of potential fees can obstruct the export of a leased aircraft: airport charges and customs fees.

Capital Gains Tax Risks on Sale of Leased Aircraft and Aircraft Engines
Basch & Rameh
  • Aviation
  • Brazil
  • 30 May 2007

It is becoming increasingly common for aircraft and aircraft engines on lease to Brazilian airlines to be sold or transferred during their lease terms as part of refinancing transactions, securitizations or simple portfolio dispositions. However, since amendments to the law in 2004 such transactions risk being assessed for Brazilian capital gains tax.

Aircraft Mortgages: A Complex Business
Basch & Rameh
  • Aviation
  • Brazil
  • 31 January 2007

Mortgages play a key role in the financing and security packages of Brazilian-registered aircraft. Under the Aeronautical Code, a mortgage granted over an aircraft registered in Brazil should be governed by Brazilian law. Furthermore, to create an aircraft mortgage the mortgage deed must be registered with the Brazilian Aeronautical Registry.

Redistribution of Varig's Slots and Route Rights
Basch & Rameh
  • Aviation
  • Brazil
  • 01 November 2006

A dispute has arisen concerning the authority of a bankruptcy court to limit the powers of the Brazilian Agency for Civil Aviation (ANAC) regarding the regulation of Brazilian route rights and slots. In general, route rights and slots are regulated solely by ANAC; however, circumstances have arisen that have cast doubt on ANAC's authority.

Government Amends Tax Treatment of Airline Finance Leases
Basch & Rameh
  • Aviation
  • Brazil
  • 16 August 2006

Nearly all aircraft operated by Brazilian airlines are leased into Brazil through cross-border operating leases. For tax reasons, Brazilian airlines rarely, if ever, hold any equity in the aircraft or spare engines that they operate. The Executive has recently passed an order that alters the way Brazilian airlines lease and acquire aircraft and aircraft engines.

New Law Impacts on Repossession in Aircraft Leases
Basch & Rameh
  • Aviation
  • Brazil
  • 14 June 2006

The Judicial Recuperation Law, which took effect in June 2005, has had a major impact on repossession in aircraft leases, particularly in the long-running Varig Case. Varig Brazilian Airlines has interpreted Article 199 of the new law as allowing it to submit operating leases to judicial recuperation protection.

Congress Clarifies Airline Reorganization Procedure
Basch & Rameh
  • Aviation
  • Brazil
  • 21 December 2005

The Bankruptcy Law has been amended with regard to the reorganization of airlines and aircraft leases. Under the former law, airlines were prohibited from seeking protection. The new law, for the first time in over four decades, allows Brazilian airlines to seek protection from creditors under a reorganization scheme called judicial recuperation.

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