Basch & Rameh updates

Modernising the Aeronautical Registry: electronic filing now available
Basch & Rameh
  • Aviation
  • Brazil
  • August 09 2017

For the past few months, the Brazilian Aeronautical Registry has experimented with a new electronic filing system that allows parties to file documents electronically 24 hours a day, seven days a week. This system is now operative for documents relating to commercial aircraft. Documents relating to private aircraft, business aircraft and helicopters are still being filed physically. The new electronic system is expected to become available to them during the second half of 2017.

Brazil designates Ireland as tax haven: impact on aircraft finance
Basch & Rameh
  • Aviation
  • Brazil
  • February 22 2017

In September 2016 the Brazilian Revenue Service unexpectedly promulgated a change in its treatment of Ireland, which had the potential to wreak havoc on the aircraft leasing sector for the entire country. After four weeks of considerable uncertainty, the changes – as they apply to commercial aircraft leases – were suspended. While the clarifications temporarily resolve the initial concerns regarding commercial aircraft leases, they provide no relief for other important sectors, such as the air taxi sector.

Interchange and foreign capital investment limits for airlines – changes to legislation
Basch & Rameh
  • Aviation
  • Brazil
  • August 17 2016

As the revision to the Aeronautical Code is taking longer than expected, the president promulgated interim legal measures earlier in 2016, including one change particularly relevant to air carriers – restrictions on foreign investment in airlines. Although ultimately vetoed, these measures still merit attention, as they are indicative of future legislation.

Lessor rights in airline bankruptcy proceedings
Basch & Rameh
  • Aviation
  • Brazil
  • March 30 2016

Brazil's airlines are facing unprecedented economic and financial pressures. With approximately 15 to 20% of their payment obligations fixed in US dollars, they have seen their operational profits drastically decline and are experiencing significant operating losses. Although no airline has sought bankruptcy protection, the risk that a major airline will do so is considerable and lessors should be aware of their rights and risks should this occur.

Revisions to Aeronautical Code
Basch & Rameh
  • Aviation
  • Brazil
  • December 02 2015

The Senate is undertaking a serious effort to revise and modernise the Aeronautical Code, which dates back to 1986. Although it is too early to know the special senate committee's final recommendations, the new code is expected to conform to the Cape Town Convention and relax existing restrictions on foreign investment in Brazilian airlines.

Post-closure matters in aircraft finance – common misunderstandings
Basch & Rameh
  • Aviation
  • Brazil
  • July 01 2015

A common misunderstanding that arises in Brazilian aircraft finance transactions relates to post-closure requirements as, due to delays, a significant amount of the legal work on a transaction occurs after the closure date. As no magic solutions exist to avoid post-closure issues completely, lessors and financiers must accept that Brazilian transactions may take longer compared with those in other jurisdictions.

Changes to applicability of COFINS tax on aircraft
Basch & Rameh
  • Aviation
  • Brazil
  • February 25 2015

For decades, imports of aircraft and aircraft parts have been exempt from most taxes that apply to imports. However, the application of the contribution to the financing of social security tax has recently changed and some tax inspectors have begun applying the tax to aircraft imports. While most industry participants expect the courts to clarify that the tax does not apply to the import of aircraft, it is unclear whether and when this will happen.

Cape Town Convention – first six months
Basch & Rameh
  • Aviation
  • Brazil
  • October 08 2014

The Cape Town Convention has now been in effect for six months, and has thus far been encouraging. The Brazilian Aeronautical Registry has become increasingly proficient at issuing authorising entry point codes. Further, the Civil Aviation Agency has demonstrated its knowledge of the convention and its willingness to enforce it, including deregistration of an aircraft on the basis of an irrevocable deregistration and export request authorisation.

New regulations on functioning of Brazilian Aeronautical Registry
Basch & Rameh
  • Aviation
  • Brazil
  • April 02 2014

A number of new regulations were recently promulgated relating to the functioning of the Brazilian Aeronautical Registry (RAB). The new regulations are a positive step towards achieving additional clarity on a variety of issues and demonstrate the RAB's responsiveness to the aviation finance community. They will be of interest to both Brazilian operators and non-Brazilian lessors and holders of security interests.

Increased clarity for bond requirements in aircraft repossession
Basch & Rameh
  • Aviation
  • Brazil
  • November 20 2013

Bond requirements imposed on non-Brazilian plaintiffs in Brazilian aircraft repossession cases have been subject to uncertainties for some time. However, emerging court trends have increased the clarity of such issues and improved the procedures for the repossession of leased aircraft. While these trends and the decision have not eliminated all uncertainties, they have reduced them significantly.

Changes to structure of aircraft financing have far-reaching consequences
Basch & Rameh
  • Aviation
  • Brazil
  • July 31 2013

Two recent changes - one legislative and one regulatory - have substantially altered the way in which aircraft may be financed for Brazilian operators. The changes affect virtually all new cross-border aircraft finance transactions, although the precise impact will depend on the type of Brazilian operator. For business aviation, the modifications are the most significant and sweeping to occur in nearly two decades.

Privatisation of Brazilian airports continues apace
Basch & Rameh
  • Aviation
  • Brazil
  • April 24 2013

Despite Brazil's position as a major emerging market, its transportation infrastructure is somewhat lacking. Ground-based alternatives are limited, which exerts tremendous pressure on the air transport system. As the government does not have the necessary resources to modernise its facilities, it has turned to privatisation to speed up renovation of the country's most important airports.

Procedures for international registration announced despite convention delay
Basch & Rameh
  • Aviation
  • Brazil
  • November 28 2012

Despite committing to the Cape Town Convention over a year ago, Brazil's legal system requires publication of a further executive order before the convention can be fully implemented. Notwithstanding this, the government recently announced proposed rules and procedures concerning how international interests over aircraft registered in Brazil may eventually be made with the International Registry, among other things.

Brazilian aircraft mortgages and their use in aircraft financing
Basch & Rameh
  • Aviation
  • Brazil
  • August 01 2012

Mortgages given over aircraft registered in Brazil have been used for many years. However, there are several major differences between Brazilian aircraft mortgages and those given under New York or English law. An understanding of these differences assists lending institutions in deciding how to evaluate their security packages, when to require aircraft mortgages and what they can expect from such mortgages.

Developments in exporting and deregistering repossessed aircraft
Basch & Rameh
  • Aviation
  • Brazil
  • March 21 2012

Since the early 1990s repossession of leased aircraft in Brazil has been a relatively efficient process, with most lessors able to secure possession of leased aircraft in a matter of days. However, over the past two years, several changes have occurred in the procedures that have resulted in longer periods for exporting and deregistering aircraft repossessed from Brazilian lessees.

Ratification of Cape Town Convention inches closer
Basch & Rameh
  • Aviation
  • Brazil
  • September 28 2011

In recent months Brazil has been inching closer to ratification of the Cape Town Convention on International Interests in Mobile Equipment and the attendant Protocol to the Convention on Matters Specific to Aircraft Equipment. The Senate recently approved both the convention and the supplementary protocol, completing the last legislative step in the approval process. The president is expected to ratify the convention shortly.

Changes in ANAC procedures create uncertainty in aircraft deliveries
Basch & Rameh
  • Aviation
  • Brazil
  • April 27 2011

The National Civil Aviation Agency (ANAC) has recently made two changes in its practices that are causing uncertainty and difficulty in some aircraft lease deliveries and redeliveries. As in the past, changes in ANAC practices are subject to review and may be reversed, especially if airlines and other operators raise any problems relating to them. Occasionally, ANAC alters its policies without realising the potential consequences.

Terms of war risk programme still unclear for aircraft financers
Basch & Rameh
  • Aviation
  • Brazil
  • November 03 2010

After the September 11 2001 terrorist attacks, many governments sought or were required to provide support to their national airlines in bearing the increased cost of insurance against certain war and terrorist risks. In order to deal with this, the Brazilian government passed a specific law providing certain cover to Brazilian airlines. However, the law generates many misunderstandings concerning the risks and parties covered.

Recent changes to filing requirements at the Brazilian Aeronautical Registry
Basch & Rameh
  • Aviation
  • Brazil
  • August 04 2010

Earlier in 2010 the Brazilian Aeronautical Registry promulgated several changes to its filing procedures that have caused considerable confusion and altered the way in which parties must organise closings. Its objective was to streamline the filing and registration process, and it is hoped that the new policies will result in more consistently applied policies that will help closings to proceed without delays.

Aircraft lessor rights reaffirmed in Brazilian bankruptcy proceedings
Basch & Rameh
  • Aviation
  • Brazil
  • May 26 2010

Previous court cases have produced precedents that posed a threat to the voting rights of aircraft lessors in Brazilian bankruptcy restructuring proceedings. However, a recent decision by a Sao Paulo bankruptcy court and the initial vote of an appeals court panel indicate a more balanced and beneficial approach, rather than one which follows vague concepts of equity in an attempt to save airlines at any cost.

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