INDONESIA Law and Practice Contributed by: Enny Purnomo Widhya, Nugrahani Astiyanti and I Gusti Ngurah Oka Anantajaya, Mochtar Karuwin Komar
3. Aircraft Debt Finance 3.1 Structuring 3.1.1 Restrictions on Lending and Borrowing There are no specific restrictions on foreign lenders providing loans to finance aircraft purchases in Indo - nesia, subject to the following. • Foreign exchange generated from an offshore loan must be first withdrawn by the borrower through an Indonesian foreign exchange bank. This provision, however, is not applicable to leasing transactions (where the Indonesian lessee is not directly receiv - ing loans from the offshore creditors). • Offshore loan reporting obligations must be car - ried out by a borrower, covering offshore borrowing plan, initial reporting, as well as periodical report - ing to Bank Indonesia and the MOF. The reporting obligation to Bank Indonesia is carried out elec - tronically and such reporting is also delivered to the MOF. 3.1.2 Effect of Exchange Controls or Government Consents See 2.1.4 Exchange Controls . 3.1.3 Granting of Security to Foreign Lenders Borrowers are permitted to grant security to foreign lenders. 3.1.4 Downstream, Upstream and Cross-Stream Guarantees Guarantees are permitted provided that they are in the commercial interests of the guarantor, and that there was or will be (as the case may be) a genuine, adequate and tangible corporate benefit in execut - ing the documents and entering into the transactions contemplated thereunder. 3.1.5 Lenders’ Share in Security Over Domestic SPVs It is advisable for a lender to take share security over a domestic special purpose vehicle that owns the financed aircraft. A pledge of shares is recognised under Indonesian law and could create a preference for the lender as a secured creditor over unsecured creditors, subject to compliance with prevailing law and regulations.
Regulation”). The Cape Town Convention is effective in Indonesia as of 1 July 2007. Indonesia has not designated an entry point for the purpose of the registration of international interests with the International Registry. 2.10.2 Declarations Made Concerning Conventions Indonesia has made declarations under Article 39 (1) (a) and (b), Article 40, Article 53 and Article 54 (2) of the Convention. 2.10.3 Application of Article XIII of the Protocol on Matters Specific to Aircraft Equipment Article XIII of the Protocol applies domestically in Indonesia. Registration of an IDERA is the respon - sibility of the authorised party. To register an IDERA with the DGCA, the authorised party under the IDERA should file an application with the DGCA attaching the prerequisite documents. Upon receipt of the complete application, the DGCA will review the application. If everything is in order, the DGCA will then register the IDERA as evidenced by the countersignature of the IDERA by an official of the DGCA in the original IDERA. The original IDERA which has been countersigned by the DGCA will then be provided to the authorised par - ty named therein (or its proxy). Normally, the process takes approximately one to two weeks to complete. 2.10.4 Enforcement of Conventions To the best of the authors’ knowledge, provisions of the Convention and the Protocol have not been tested
before Indonesian courts. 2.10.5 Other Conventions
Indonesia has not ratified the 1948 Geneva Conven - tion on the International Recognition of Rights in Air - craft or the 1933 Rome Convention on the Unification of Certain Rules relating to the Precautionary Arrest of Aircraft.
293 CHAMBERS.COM
Powered by FlippingBook