Wednesday 10 May 2017
Government sign Order to adopt “Alternative A” insolvency provisions of the Cape Town Convention and Aircraft Protocol 2001 into Irish law
The Minister for Transport, Tourism and Sport, Shane Ross TD, is pleased to announce that the Government has signed an Order which gives immediate effect into law to the “Alternative A” insolvency provisions of the Aircraft Protocol to the Cape Town Convention on International Interests in Mobile Equipment.
The Government Order will allow creditors gain access to their aircraft assets in the event of the insolvency of a debtor. In practice this means that, in the event that a debtor leasing an aircraft – typically an airline - is declared insolvent, the relevant creditor - typically the aircraft leasing company - can obtain access to their assets after 60 days assuming the defaults have not already been cured in that timeframe.
The Minister said: “Ireland is already the global leader for aircraft leasing, with the top lessors in the world located here and making a significant contribution in terms of high-value job creation. This new legislation will send a clear signal to the world that we continue to strengthen our competitiveness in this highly mobile sector and in the face of increasing competition from other jurisdictions. Ireland is considered to be the birthplace of aircraft leasing and our strong reputation is underpinned by a supportive regulatory and corporation tax regime as well as an excellent tax treaty network.”
The new legislation, giving the creditor the right to take possession of aircraft assets after a 60 day period, is a special legal measure to apply only to transactions in the aircraft financing and leasing sector. Existing Irish insolvency legislation does not give that same certainty as to the right to repossession of an asset after a specified timeframe. Entities under the insolvency process known as “examinership” process can avail of protection from their creditors for a period of 70 days.
The Minister added: “While Ireland ratified the Capetown Convention in 2005, we did not at that time put in place the insolvency measures available under the Convention. Increasingly other jurisdictions, including in Europe, are implementing the “Alternative A” provision, and it’s critical that Ireland can also add this measure to its suite of favourable supports to the sector”.