Repossessing an aircraft is more challenging than other forms of recovery due to its mobility. The lender must comply with prior notice requirements and communicate with the debtor to try to work out a revised payment arrangement. Legal action may be required, and recovery may take weeks or months. Aircraft salvage is a last resort as it often results in a loss, and the sale requires a public auction. Recovery specialists must have specialist skills to operate the plane and overcome any attempts to disable it.
Recovery of an aircraft is similar to other forms of recovery by a lender. It’s much more challenging, however. For one thing, an airplane is more cumbersome to recover than a car. Unlike a home, many types of aircraft can be relocated anywhere in the world. All of these factors can make aircraft recovery difficult and risky.
Non-payments or other violations of a written agreement usually precede ownership of an aircraft. Any prior notice requirements must also be complied with. Notification requirements may vary, depending on any applicable recovery laws.
Typically, the lender must communicate that payments are late and that the aircraft is at risk of being impounded. This may also mean giving the debtor the opportunity to have payments pending. It is usually in the lender’s best interest to try to work out a revised payment arrangement rather than repossessing the aircraft.
Loan documents are usually used to prove that the lender has the right to repossess the aircraft. The first step in recovering your aircraft is a thorough review of all loan documents. After all the paperwork is in order, the aircraft can be legally impounded.
Recovery of an aircraft often requires the involvement of other parties. For example, the cooperation of employees of an airport or a hangar where the aircraft is housed may be required. In some cases, employees may not cooperate unless a court order is shown. In that event, legal action will be required to complete the recovery of the aircraft.
Further legal action can slow down the process. For example, hearings may be required before the aircraft is recovered. The whole process could take weeks or months. In addition, a separate court order may be required to seize aircraft records or logs.
A lender will usually employ aircraft salvage as a last resort. One reason is that a salvaged aircraft is often a loss because you owe it more than it’s worth. The aircraft will also have to be sold to recoup any losses.
The sale of a salvaged aircraft usually requires a public auction. There may be additional costs involved in hiring an auction company. In some cases, a law firm may conduct the auction.
Those carrying out the actual recovery of the aircraft must have specialist skills. First, they must know how to operate the plane before taking it. This may include overcoming anything that may have been done to disable the aircraft if the debtor knows it is scheduled to be recovered. An aircraft salvage is considered successful if an uneventful salvage is carried out and the lender is able to sell the aircraft and recover some or all of the losses.
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