Bermuda strengthens aircraft financing laws
Article first published in the Royal Gazette July 2017
Recent legislative amendments have further strengthened Bermuda’s position as an offshore leader in the global aircraft finance market.
The island has long been a jurisdiction of choice for aircraft financing transactions. Going forward, the continued positive outlook in the global aircraft finance sector means that protecting the interests of secured parties over aircraft and engines is crucial.
In this regard, Bermuda recently amended the Mortgaging of Aircraft and Aircraft Engines Act 1999 (Act) to remove the requirement that an aircraft or aircraft engine must be owned by, leased or chartered to, or otherwise in the lawful possession of a company incorporated in Bermuda to be made security for a loan. The Act, together with ancillary regulations made under the Act, provide for the establishment and maintenance of a register of aircraft mortgages and aircraft engine mortgages.
Prior to the amendment, mortgages could only be registered against Bermuda-registered aircraft and aircraft engines if such aircraft or aircraft engine were either owned by, or otherwise in the possession of, a Bermuda incorporated company. On 2 June 2017, the Mortgaging of Aircraft and Aircraft Engines Amendment Act 2017 (Amendment Act) amended the Act to remove such requirement.