LITHUANIA Law and Practice Contributed by: Gintautas Šulija and Eduard Plešak, Šulija & Partners
3. Aircraft Debt Finance 3.1 Structuring 3.1.1 Restrictions on Lending and Borrowing There are no legislative restrictions in Lithuania on foreign lenders financing an aircraft locally or on bor - rowers using the loan proceeds. 3.1.2 Effect of Exchange Controls or Government Consents There are no exchange controls or government con - sents in Lithuania that would be material to any financ - ing or repatriation of realisation proceeds under a loan, guarantee or security document. 3.1.3 Granting of Security to Foreign Lenders There are no legislative restrictions in Lithuania on borrowers granting security to foreign lenders. 3.1.4 Downstream, Upstream and Cross-Stream Guarantees Corporate guarantees are permitted and should be enforceable in Lithuania. 3.1.5 Lenders’ Share in Security Over Domestic SPVs The pledge of shares is recognised in Lithuania. 3.1.6 Negative Pledges Negative pledge is recognised in Lithuania. 3.1.7 Intercreditor Arrangements Intercreditor arrangements are recognised in Lithu - ania. 3.1.8 Syndicated Loans Syndicated loan agreements are recognised in Lithu - ania. 3.1.9 Debt Subordination Debt subordination is recognised in Lithuania. 3.1.10 Transfer/Assignment of Debts Under Foreign Laws Transfer or assignment of all or part of an outstanding debt under an English or New York law-governed loan is recognised in Lithuania.
3.1.11 Usury/Interest Limitation Laws There is no statutory limitation on the interest rate between commercial parties and parties are free to agree on the interest rate. However, a Lithuanian court is entitled to exercise some policing over interest rates and can reduce clearly excessive interest rates (even if they were contractually agreed). 3.2 Security 3.2.1 Typical Forms of Security and Recourse Aircraft mortgage along with third-party guaran - tees are the most typical forms of security granted in aviation finance transactions. The debtor is also sometimes required to get its own shares pledged and refrain from certain actions limiting the debtor’s capacity to repay the debt. 3.2.2 Types of Security Not Available As long as the contractual arrangements concerning the securities are not conflicting the overriding local laws, all types of securities are permitted and should generally be enforceable in Lithuania. 3.2.3 Trust/Trustee Concepts The concept of trust and security trustee is generally not recognised in Lithuania. In practice, parallel debt arrangements are agreed in contractual documenta - tion. 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee Security assignments should generally be permissible and enforceable in Lithuania. Assignment of a mort - gage is subject to notarial certification and perfor - mance of the required amendments in the mortgage documentation. 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations If a mortgage constitutes security, a creditor may transfer their rights under the mortgage without trans - ferring the secured claim. 3.2.6 Choice of Foreign Law Security over immovable property (aircraft is deemed to be immovable property) must be governed by the laws of the Republic of Lithuania.
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