The legislative ‘black hole’ in aircraft creditors’ rights in Canada: pre-Cape Town Convention interests
The entry of the Cape Town Convention into force under Canadian law is a positive step, but has led to a legislative ‘black hole’ in the protection provided to certain aviation creditors, bringing with it considerable uncertainty and potentially expensive ramifications.
On 1 April 2013, the Cape Town Convention (CTC) was ratified into Canadian law, making it necessary to register Canadian security interests in ‘aircraft objects’ at the International Registry of Mobile Assets (IR) from that date forward. Prior to its ratification and entry into force, aircraft leasing and financing agreements with Canadian air carriers were registered provincially under the applicable Personal Property Security Act (PPSA) registry regimes.
The CTC has not eliminated the importance of these registries, but operates at the international level to provide a uniform and comprehensive framework for the determination of rights in aircraft objects. It also provides a standardised set of legal remedies for defaults under leasing, conditional sales and security agreements, including those concerning repossession and those that have an impact on the ownership and possession rights of aircraft objects in an insolvency context…
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