Wednesday, December 05, 2018

India: Insolvency In Indian Aviation: What Does India's New Cape Town Convention Bill Mean For Recovery And Re-Possession Of Leased Aircrafts?

Leasing of aircrafts is a prevalent market practice in the aviation industry, and all existing airline operators in India have currently leased a significant number of aircrafts in their fleet. In fact, a sizeable debt in the books of these operators is in connection with such leasehold arrangements.

Insolvency proceedings in India, including the aviation sector, are governed by the Insolvency and Bankruptcy Code, 2016 (IBC). On 8 October 2018, the Indian government proposed the enactment of the Cape Town Convention Bill, 2018 (Bill), which when enacted will give primacy to the provisions of the Convention on International Interests in Mobile Equipment (Convention) and Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (Protocol), overriding any conflicting provision contained in any other law in force, especially the IBC and its moratorium provisions. Once this Bill is enacted into law, the Convention and the Protocol will become part of Indian law.

While the Bill potentially impacts the aviation insolvency sphere in multiple respects, this update analyses the effect of the Bill on the ability of lessors to re-possess aircrafts leased to Indian airline operators in insolvency under the IBC (corporate debtors) and other practical aspects in relation to this
05/12/18  Ashwin Bishnoi, Charu Chitwan and Amrit Mahal/Khaitan & Co
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