Security document (mortgage) form and content

What is the typical form of a security document over the aircraft and what must it contain?

Aircraft mortgages are not known under Belgian law. Pledges are generally used as a substitute. Since 1 January 2018, their effectiveness depends either on their registration in the electronic pledge registry (Registre National du Gage or Nationaal Pandregister), or on the continued possession of the aircraft by the pledgee or a third-party holder (where, in practice, the operator will act as third-party holder). The pledge agreement should contain at least a description of the pledged asset, the maximum value of the guaranteed debt and the designation of the related secured debt.

Security documentary requirements and costs

What are the documentary formalities for creation of an enforceable security over an aircraft? What are the documentary costs?

There are no specific documentary formalities for the creation of a pledge. Since 1 January 2018, creation is effected through electronic registration.

Security registration requirements

Must the security document be filed with the aviation authority or any other registry as a condition to its effective creation or perfection against the debtor and third parties? Summarise the process to register a mortgagee interest.

In Belgium it is, in principle, not necessary to file security documents with the Belgian CAA or in any other registry. Since 1 January 2018, the creation of a pledge over an aircraft or its engines is effected through electronic registration. The registration process essentially requires the filing of the following information in French or in Dutch and in the pledge agreement language: the contact details of the pledgor and the pledgee, a description of the owner’s pledged asset, a description of the related secured debt (which in general will be a loan agreement) and the determination of the maximum guaranteed value in euros. The costs associated with the registration of a pledge over an aircraft are generally around €500 for a 10-year registration and €200 for a deregistration.

Registration of security

How is registration of a security interest certified?

Pledges registered in the electronic registry are documented by an acknowledgment of registration that contains in a short format the electronic registration number, the name of the pledgor and pledgee, the description of the pledged asset, the designation of the secured debt, the maximum guaranteed value in euros, the pledge expiration date and the date of registration. The electronic registration is, however, made by the pledgor and is not verified by the Ministry of Finance running the registry.

Effect of registration of a security interest

What is the effect of registration as to third parties?

A registered pledge will normally take priority over unregistered and later registered security interests. But specific privileges and liens may coexist over the same aircraft, such as maintenance, repair and operations (MRO) privileges for repairs made on the aircraft, warehouse liens for unpaid rent and Eurocontrol’s liens over unpaid charges.

Security structure and alteration

How is security over aircraft and leases typically structured? What are the consequences of changes to the security or its beneficiaries?

In Belgium, security over aircraft generally takes the form of a security deposit, parent company guarantee, assignment of receivables or insurance proceeds, or a pledge. The pledge is the most common form.

Security over spare engines

What form does security over spare engines typically take and how does it operate?

As movable goods, engines in lease and finance agreements are traditionally secured by a pledge. As a conflict may arise if there is also a pledge over the airframe, recognition of rights agreements are generally signed between the involved parties.