The process of repossession will involve complex issues of fact and law. Each one is different depending upon the jurisdiction involved, the approach of the operator and the attitude of the relevant authorities.
Information and planning
In order to maximize the chances of a successful repossession, the lessor must assemble as much information as possible. This applies both to the lessee’s defaults, should evidence be required, and to practical issues such as the location of the aircraft and the jurisdictions to which it will be flying, as well as the location of the records. Without the records the value of the aircraft is significantly reduced and the cost of recreating the records is substantial. One of the first things to do therefore is to check where they are. Can the records be secured? Contact between the lessor’s and the lessee’s technical representatives at an early stage is often sensible to obtain access to the records.
The lessor will need to terminate the leasing of the aircraft in order to repossess. This should follow precisely the notice provisions in the lease. The timing of the termination notice can also be crucial in order to get the aircraft in the most helpful jurisdiction.
If the lessee is likely to be uncooperative, it may be necessary to get a court order or injunction requiring delivery up of the aircraft. This has the advantage that the local authorities may recognise the order more readily than a simple termination notice. However it is a more expensive and time consuming process as it requires the lessor’s lawyers to go before the court, often at very short notice, e.g. just before the aircraft is about to land in the jurisdiction. Not all jurisdictions will deal with such applications sufficiently quickly for this to be effective.
The lessor will need to provide a witness statement with full and frank details of the background and may also need to be ready to give security or an undertaking to the court to be responsible for any damages which the airline might suffer as a result of an injunction, if subsequently held to be wrongfully obtained.
If the lessee is in default under the lease it is likely that it will also owe third parties who may be able to assert a lien over the aircraft. Different jurisdictions will have different rules on liens. In many jurisdictions airports can assert a lien for their charges but this is often limited. Few jurisdictions will allow a fleet lien but local advice should be sought if there are substantial airport or navigation charges outstanding.
If the aircraft is due for maintenance, a possible method of enforcement is to serve the termination notice when it arrives at the MRO and then notify the MRO that the lease has been terminated. The maintenance facility is likely to refuse to release the aircraft until it is certain of the position. MROs may also be able to assert a lien for work done so timing is again important as it is often best to terminate as soon as the aircraft lands so the lessor can control what work is to be done.
Local advice will be required in respect of any relevant regulatory requirements. For example, the pilot of an aircraft registered in a particular jurisdiction must in some cases be a national of that jurisdiction. It may therefore be necessary to find local pilots if a ferry flight is required following repossession.
Whether or not a repossession is successful is often down to jurisdiction. The aircraft may be returned voluntarily after some negotiation, but if this is not the case the lessor may be forced to repossess the aircraft through self-help or with action through the courts. Not all jurisdictions allow self help. If the aircraft is about to go to a jurisdiction that does, it is usually prudent delay issuing the termination notice until the aircraft flies into that jurisdiction.
The above factors are even more important in a fleet repossession. If a fleet repossession is necessary, then to the extent possible, it is prudent to delay termination and repossession until as many aircraft as possible are in the same or ‘good’ jurisdictions.
Lawyers with experience of the processes involved with repossessing aircraft and that have contacts with relevant experience in local jurisdictions where the repossession may need to take place is therefore also crucial.