FRANCE Law and Practice Contributed by: Yves Hénaff d’Estrées, HENAFF D’ESTREES
made in accordance with the corporate interest and benefit of the guarantors, and in accordance with cor - porate and monetary law. There are no registration requirements. 3.1.5 Lenders’ Share in Security Over Domestic SPVs It may be advisable for a lender to take share security over a domestic special purpose vehicle that owns the financed aircraft. Pledges of shares are possible under French law. 3.1.6 Negative Pledges Negative pledges are recognised by the French courts when made in accordance with the corporate interest and benefit of the pledgor. 3.1.7 Intercreditor Arrangements There are no specific or substantial material restric - tions or requirements imposed on intercreditor arrangements. 3.1.8 Syndicated Loans The concept of agency and the role of an agent (such as a liability agent) under a syndicated loan is recog - nised in France. 3.1.9 Debt Subordination All valid methods of debt subordination are permis - sible and recognised. 3.1.10 Transfer/Assignment of Debts Under Foreign Laws The transfer or assignment by a creditor of all or part of an outstanding debt under an English or New York law-governed loan is permissible and recognised once the debtor has been notified of this. 3.1.11 Usury/Interest Limitation Laws There are no limitation laws on interest regarding loans to business legal persons, except for overdraft debts. 3.2 Security 3.2.1 Typical Forms of Security and Recourse The typical form of security over an aircraft in France is the aircraft mortgage ( hypothèque ) which is governed by French law and, once it has been registered with the aircraft register, permits the creditor to seize and
proceed to a judicial sale of the aircraft in the case of default of payment. 3.2.2 Types of Security Not Available No pledge (gage) may be made or registered for a French-registered aircraft. 3.2.3 Trust/Trustee Concepts Foreign trusts and the role of a security trustee are recognised by the French courts, and the Supreme Court has declared that parallel debt structures are not contrary to French international public order. 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee A borrower may assign its rights to an aircraft or under an aircraft lease (including in relation to insurance) to a foreign security trustee, pursuant to a security assign - ment or mortgage. 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations It is possible to assign the rights and benefits only, without also assigning the attendant obligations of the A security assignment or guarantee can generally be governed by English or New York law, as long as it does not contradict French public order rules, in order to be fully enforceable in France. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments Subject to the terms of the agreement, the transfer of a French aircraft mortgage by a mortgagee must be notified to the mortgagor, and the transfer of an engine pledge must be notified to the former pledgor. The new mortgagee must be formally registered in the aircraft register in order to perfect the transfer of the mortgage and bind third parties. In all cases, a translation of a mortgage assignment will need to be produced in court. The transfer of an engine pledge is perfected by regis - tering the transfer with the national register of pledges, after notice has been given to the previous pledgor. lessor, under an aircraft lease. 3.2.6 Choice of Foreign Law
186 CHAMBERS.COM
Powered by FlippingBook