FRANCE Law and Practice Contributed by: Yves Hénaff d’Estrées, HENAFF D’ESTREES
2.10.5 Other Conventions The 1948 Geneva Convention on the International Recognition of Rights in Aircraft is applicable in France. The 1933 Rome Convention for the Unification of Certain Rules relating to the Precautionary Arrest of Aircraft is not applicable in France. 3. Aircraft Debt Finance 3.1 Structuring 3.1.1 Restrictions on Lending and Borrowing Regular lending activities in France are limited by the banking monopoly rule to credit institutions that are licensed to do business in France as credit institu - tions, or to credit institutions duly established and authorised in the European Union or in the European Economic Area. However, the issuance of bonds stays outside the banking monopoly. There are no usury rate prohibitions for loans made to French corporations. The borrowers may use the loan proceeds in accordance with their own corporate purpose and benefit. A withholding tax of 75% will not generally be due, except in certain circumstances where a borrower makes reimbursement payments to an entity based in a state or territory which is consid - ered as non-cooperative regarding transparency and exchange of information in fiscal matters. 3.1.2 Effect of Exchange Controls or Government Consents Except where French public order or strategic sectors are concerned, no exchange controls or government consents are material to any financing or repatriation of realisation proceeds under a loan, guarantee or security document. 3.1.3 Granting of Security to Foreign Lenders Borrowers are permitted to grant security to foreign lenders when this is not contrary to the corporate interests and benefit of the borrower, and if made in accordance with French corporate and monetary law. 3.1.4 Downstream, Upstream and Cross-Stream Guarantees Downstream, upstream and/or cross-stream guaran - tees are permitted in favour of lenders when they are
return the aircraft. The trustee may elect to con - tinue the lease without paying the lease rentals due before the judgment; or • if the lease has not been registered by the lessor, the lessor of a French registered aircraft does not have to first revendicate ( revendiquer ) its rights, ie, request the court to recognise its ownership rights on the French registered aircraft (French Supreme court decision of 27 March 2024). 2.9.10 Impact of Domestic Lessees’ Winding-Up If a domestic lessee is liquidated by a French court judgment, the following generally occurs: • the aircraft may be repossessed if the liquidator trustee elects not to continue the performance of the lease, or if the lease is terminated for default of payment of rentals due after the judgment; • the lessor must declare its debt to the liquidator for rentals that become due after the judgment and will be paid if there are sufficient funds after paying the other preferential debts; • the lease security deposit must be returned to the lessor when the lease is terminated; and • the maintenance reserves paid to the lessor (whether classified as reserves or supplemental rent) will remain with the lessor in accordance with the terms of the lease. 2.10 Cape Town Convention and Others 2.10.1 Conventions in Force The Convention on International Interests in Mobile Equipment (the “Convention”) and the related Pro - tocol on Matters Specific to Aircraft Equipment (the ”Protocol”) are not in force in France. 2.10.2 Declarations Made Concerning Conventions This is not applicable in France. 2.10.3 Application of Article XIII of the Protocol on Matters Specific to Aircraft Equipment This is not applicable in France. 2.10.4 Enforcement of Conventions This is not applicable in France.
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