Vedder Price LLP updates

Slots can be traded for value even after insolvency
Vedder Price LLP
  • Aviation
  • United Kingdom
  • May 16 2018

Monarch Airlines Limited's administrators have won an appeal with the Court of Appeal regarding Monarch's rights in and to certain 'slots' at Luton and Gatwick airports after it went into administration. The case is significant, as it reaffirms the value ascribed to slots by airlines and their financiers as rights of the airline and the fact that, as a result, they can be traded for value even after insolvency.

Operating lessor financings: structural overview
Vedder Price LLP
  • Aviation
  • United Kingdom
  • March 28 2018

With competition among aircraft lessors remaining fierce, airlines are taking an increasing proportion of aircraft on operating leases. The 'wholesaling' of debt financing – where the primary recourse entity on financings is the lessor rather than the airline – is an important recent trend in the aircraft financing market that is likely to continue. Aircraft financiers should be aware of the structural items to consider in executing operating lessor financings and the pitfalls to be avoided.

Split closings: a divide in methods
Vedder Price LLP
  • Aviation
  • United Kingdom
  • March 21 2018

The inclusion of engine pooling arrangements and rigorous maintenance requirements in operating leases frequently results in engines which formed part of a leased aircraft at delivery being off-wing. Off-wing engines create complications for transaction parties attempting to execute a sale of the aircraft. While these complications are not insurmountable, the marketplace has developed different approaches to address the off-wing engine scenario.

Necessary regulation or the government droning on?
Vedder Price LLP
  • Aviation
  • United Kingdom
  • August 23 2017

The Department for Transport recently published its response to a public consultation concerning the safe use of unmanned aircraft systems in the United Kingdom. Both in the consultation and the response, it is clear that the government's focus is on ensuring safety, particularly relating to operational issues in the leisure market. However, the response also provides insight into the direction of the government's policy as it affects commercial operators and its determination to develop world-class systems.

Commitment letters not to be taken lightly: how committed are we?
Vedder Price LLP
  • Aviation
  • United Kingdom
  • December 14 2016

At the outset of a transaction, parties often use a commitment letter, letter of intent or memorandum of understanding to set out the principal terms on which they wish to establish their commercial relationship. The principal terms are often non-binding in nature. The High Court recently referred to an objective test established by the Supreme Court to determine whether a party's intentions were accurately reflected in its initial documentation.

Unjustly enriched seller of aircraft asset: mistakes in sale and purchase transactions
Vedder Price LLP
  • Aviation
  • United Kingdom
  • September 07 2016

The trading of aircraft assets between industry participants is as dynamic, legally complex and fraught with intense negotiation as ever. Although transacting parties go to great lengths to protect their pre and post-closing positions by attempting to account for all eventualities in the applicable transaction documentation, mistakes that fall outside the protective ambit of such documentation can still occur.

PK AirFinance v Alpstream: did Court of Appeal hit the mark on mortgagees' duties?
Vedder Price LLP
  • Aviation
  • United Kingdom
  • March 09 2016

The Court of Appeal has delivered its judgment on the appeal by PK AirFinance and GECAS against the Commercial Court's decision in Alpstream v PK AirFinance. The judgment provides a welcome clarification of duties owed by mortgagees to financiers and lessors.

Cape Town Convention and Aircraft Protocol enters into force
Vedder Price LLP
  • Aviation
  • United Kingdom
  • November 18 2015

The Cape Town Convention and Aircraft Protocol recently entered into force in the United Kingdom. The disapplication of the historically vexed lex situs rules in the context of UK Cape Town interests is a welcome step, as it means that English law and jurisdiction are likely to be the best choice for any mortgage or bill of sale on a transaction involving parties situated in the European Union.

Cape Town Convention and Aircraft Protocol set to enter into force
Vedder Price LLP
  • Aviation
  • United Kingdom
  • August 05 2015

The Cape Town Convention and Protocol is now set to enter into force in the United Kingdom later this year. Its entry into force was confirmed following the deposit of the instrument of ratification with the International Institute for the Unification of Private Law on July 27 2015 at the UK embassy in Rome.

UK ratification of Cape Town Convention and Aircraft Protocol
Vedder Price LLP
  • Aviation
  • United Kingdom
  • June 17 2015

The International Interests in Aircraft Equipment (Cape Town Convention) Regulations 2015 were recently laid before Parliament, marking the commencement of the final administrative steps to ratify the Convention on International Interests in Mobile Equipment and the Protocol thereto on Matters Specific to Aircraft Equipment in the United Kingdom. It could enter into force by the end of Summer 2015.

EU declarations affecting UK implementation of Cape Town Convention
Vedder Price LLP
  • Aviation
  • United Kingdom
  • August 20 2014

The government recently published revised draft legislation designating the Convention on International Interests in Mobile Equipment and Protocol thereto on Matters Specific to Aircraft Equipment as an 'EU treaty', which will allow it to pass legislation to implement the treaty into UK law. However, the European Union made declarations when it acceded to the treaty which will affect UK implementation of the treaty.

Another hurdle cleared on path to ratification: the Cape Town Convention and Protocol
Vedder Price LLP
  • Aviation
  • United Kingdom
  • February 05 2014

As part of the government's ongoing consultation on the ratification of the Convention on International Interests in Mobile Equipment and the Protocol thereto on Matters Specific to Aircraft Equipment, the government response to the call for evidence has been published. The response is positive, but cautious about any benefits that may accompany ratification.

Alpstream v PK Airfinance: lessons for financiers and lessors
Vedder Price LLP
  • Aviation
  • United Kingdom
  • December 11 2013

A recent High Court decision highlights the duties of financiers in the context of aircraft repossessions and the associated power of sale in default scenarios, while also raising questions about the level of intention required on the part of a defendant in unlawful means torts. The case garnered significant mainstream media attention, principally because the claimants are controlled by Russian billionaire Alexander Lebedev.

High Court confirms enforceability of one-sided jurisdiction clauses
Vedder Price LLP
  • Aviation
  • United Kingdom
  • July 24 2013

Following the French Court of Cassation's Rothschild decision, the High Court has ruled that one-sided jurisdiction clauses will be upheld by the English courts. This decision confirms that English courts are unlikely to follow Rothschild and is of considerable importance to aircraft lessors, lenders and airlines.

Court highlights primacy of clear and unambiguous language in aircraft leases
Vedder Price LLP
  • Aviation
  • United Kingdom
  • May 22 2013

The Court of Appeal recently issued a decision that is of considerable importance to aircraft lessors, lenders and airlines. The decision sends a clear message that aircraft leases and their related certificates of acceptance should be construed in accordance with their plain, unambiguous terms, and that the risk allocation set forth in those documents between lessee and lessor should be given effect.

Court considers reinsurance contracts covering September 11 losses
Vedder Price LLP
  • Aviation
  • United Kingdom
  • April 24 2013

The High Court recently upheld a tribunal award relating to reinsurance contracts covering losses arising out of the terrorist attack on the World Trade Centre of September 11 2001. The judge held that the unity of cause in the attacks was both hijacking and terrorism, and that a finding as to whether the attacks fell under the terrorism or hijacking perils was irrelevant as to the question of whether one event or two had occurred.

High Court rules on delivery process for commercial operating lease
Vedder Price LLP
  • Aviation
  • United Kingdom
  • July 25 2012

Financiers and operating lessors should ensure that the delivery condition of an aircraft (including the airworthiness requirement) is an objective condition precedent in favour of the lessee. In this way, no positive obligation need be imposed on the lessor to ensure the delivery of an aircraft in any particular condition.

Planning for aircraft repossession and recovery
Vedder Price LLP
  • Aviation
  • United Kingdom
  • April 25 2012

Recent European airline bankruptcies have highlighted the need for care when devising aircraft repossession and recovery strategies. Stakeholders should be aware of the detention and sale regime in the United Kingdom, possible approaches to the risk of the Eurocontrol fleet-wide lien, and the protection available for owners and financiers in the context of EU Emissions Trading Scheme legislation.

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