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Finance, Security & International Interests

Security Registered in the National Aircraft Register

Under Maltese law, aircraft constitute a particular class of movables forming separate and distinct assets within the estates of the owners for the security of actions and claims to which the aircraft may be subject.

In the case of bankruptcy/ insolvency of the owner of an aircraft, all actions and claims to which the aircraft may be subject, shall have preference on the aircraft, over all other debts of the estate.

Any security over the aircraft shall not extend to any engine attached to the airframe, which is not owned by the airframe owner. Each of the owners retain ownership of their assets and the engine shall not, for the purpose of Maltese law, accede to the airframe.

A registered mortgage will entitle the mortgagee, in the event of default of the mortgagor, to the following self help remedies without the need of the leave of any court, and upon giving notice in writing to the debtor:

  • To take possession of the aircraft or share therein in respect of which the mortgagee is registered
  • Apply for extensions, pay fees, receive certificates and generally do all such things in the name of the owner or registrant as may be required in order to maintain the status and validity of the regisatrtion of the aircraft
  • Lease the aircraft so as to generate income there from
  • Receive any payment of the price, lease payments, and any other income which may be generated from the management of the aircraft

Mortgages by virtue of the legislative amendments have been granted more extensive powers in respect of the cancellation of the register of an aircraft and have the option to register any power of attorney granted in their favour as creditor granted by way of security for the de-regisatrtion and export of the aircraft.

Special Privileges over Aircraft

  • Special Privileges, over aircraft has been narrowed down under the Act. The following are the highest ranking priority special privileges:
  • Judicial costs incurred in respect of the sale of the aircraft and the distribution of the proceeds thereof pursuant to the enforcement of any mortgage or other executive title
  • Fees and other charges due to the Director General arising under applicable law of Malta in respect of aircraft
  • Wages due to crew in respect of their employment on aircraft
  • Any debt due to the holder of a possessory lien for the repair, preservation of the aircraft to the extent of the service performed on and value added to the aircraft
  • The expenses incurred for the repair, preservation of the aircraft to the extent of the service performed on and value added to the aircraft
  • Wages and expenses for salvage in respect of the aircraft

The Act also provides for registration of privileges, which once registered in the international Registry enjoy preference and status of such right in relation to the aircraft only if claim is made by the owner or the aircraft or a person authorised b him. This category of privileges comprises: tax, duties and/ or levies due to the Government of Malta in respect of the aircraft and wages and expenses for assistance or recovery in respect of the aircraft.

Registration of International Interests in the International Registry

As a consequence of Malta’s accession to the Cape Town Convention, interests in airframes, aircraft engines or helicopters which are granted by a charger under security agreement or vested in a person who is a conditional seller or in the lessor of an aircraft, may be registered in the International Registry. Subject to special privileges and Malta’s Declarations pursuant to the Convention, the general rule is that an international interest ranks prior to a security interest.

International Security interests registered in the International register have full effect in Malta, and one shall therefore not be required to register any security also in the National Aircraft Register. Furthermore, there is also the option once an international interest has been registered in the International Register, to file a notice prohibiting the regisatrtion of security interests in the national register without the express consent of the creditor in question.

In implementing the Cape Town Convention, the Act offers increased predictability of rights and remedies in aircraft transactions and provides added protection to holders of security interests in aircraft in the event of a default. Upon the insolvency of the debtor in those cases where Malta is the primary insolvency jurisdiction, the insolvency administrator or the debtor is required to give possession of their aircraft to the creditor by the end of a waiting period of 30 days, or cure all defaults and agree to perform all future obligations under the relevant agreement.


Email: maria.deguara@dfadvocates.com
Contact Name: Dr. Maria Deguara

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