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Commercial Aviation Finance in the British Virgin Islands

The British Virgin Islands (“BVI”) is becoming an increasingly popular jurisdiction for aviation finance not only in the private and corporate jet sectors, but also in the commercial aircraft sector.

Although commercial aircraft are generally not operated out of or registered in the BVI, the BVI is playing an important role in the structuring of international transactions to acquire, finance and lease aircraft.

The BVIs political stability, tax neutrality, well developed English based legal system, bespoke commercial court, flexible and commercial legislation and adherence to international standards of compliance have led to the BVI becoming a popular jurisdiction to establish special purpose vehicles (“SPV”) to own or lease aircraft.

Security

The SPV will typically own the aircraft. An SPV is so flexible it can be used to hold single or multiple aircraft. The acquisition of the aircraft by the SPV is most commonly financed by a third party lender who in turn will take a mortgage over the aircraft. Other security often includes granting security over the lease payments, separate security assignment(s) of the operator’s rights under the various contracts relating to the maintenance and operation of the aircraft – for example, the operating/management agreement, maintenance programs and policies of insurance and assignments of manufacturer’s warranties.

As a further protection for the lender in the context of the security provided by the SPV, a BVI business company is required to keep a register of all relevant charges created by the company. Where a company creates a relevant charge an application to register the charge may be made to the Registrar of Corporate Affairs in the BVI (the “Registrar”) pursuant to Section 163 of the BVI Business Companies Act (the “Act”). There is no concept of “perfection” of a charge but, to the extent that BVI law governs priority of the charge, a charge registered under Section 163 of the Act has priority over any subsequently registered and unregistered charges. Third parties are deemed to have notice of any publicly registered charge.

 

To continue reading full articles in PDF format:
Commercial Aviation Finance in the British Virgin Islands

 


Audrey M. Robertson
Counsel

British Virgin Islands   +1 284 852 1111


Robert J.D. Briant
Partner, Head of BVI Corporate

British Virgin Islands   +1 284 852 1100


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Articles

Commercial Aviation Finance in the British Virgin Islands

The British Virgin Islands (“BVI”) is becoming an increasingly popular jurisdiction for aviation finance not only in the private and corporate jet sectors, but also in the commercial aircraft sector.

Although commercial aircraft are generally not operated out of or registered in the BVI, the BVI is playing an important role in the structuring of international transactions to acquire, finance and lease aircraft.

The BVIs political stability, tax neutrality, well developed English based legal system, bespoke commercial court, flexible and commercial legislation and adherence to international standards of compliance have led to the BVI becoming a popular jurisdiction to establish special purpose vehicles (“SPV”) to own or lease aircraft.

Security

The SPV will typically own the aircraft. An SPV is so flexible it can be used to hold single or multiple aircraft. The acquisition of the aircraft by the SPV is most commonly financed by a third party lender who in turn will take a mortgage over the aircraft. Other security often includes granting security over the lease payments, separate security assignment(s) of the operator’s rights under the various contracts relating to the maintenance and operation of the aircraft – for example, the operating/management agreement, maintenance programs and policies of insurance and assignments of manufacturer’s warranties.

As a further protection for the lender in the context of the security provided by the SPV, a BVI business company is required to keep a register of all relevant charges created by the company. Where a company creates a relevant charge an application to register the charge may be made to the Registrar of Corporate Affairs in the BVI (the “Registrar”) pursuant to Section 163 of the BVI Business Companies Act (the “Act”). There is no concept of “perfection” of a charge but, to the extent that BVI law governs priority of the charge, a charge registered under Section 163 of the Act has priority over any subsequently registered and unregistered charges. Third parties are deemed to have notice of any publicly registered charge.

 

To continue reading full articles in PDF format:
Commercial Aviation Finance in the British Virgin Islands

 


Audrey M. Robertson
Counsel

British Virgin Islands   +1 284 852 1111


Robert J.D. Briant
Partner, Head of BVI Corporate

British Virgin Islands   +1 284 852 1100