MADAGASCAR Law and Practice Contributed by: Claudy Monja and Sarah Razafindrafito, John W Ffooks & Co
2.9.9 Ipso Facto Defaults Performance defaults are required to repossess an aircraft during a lessee insolvency proceeding. 2.9.10 Impact of Domestic Lessees’ Winding-Up If a domestic lessee is wound up by a court or admin - istration proceeding, the lease is not automatically terminated upon the issuance of the insolvency judg - ment. The following scenarios may apply. • Scenario 1:The receiver(s) can decide to continue the lease subject to the payment of the rent. If the receiver(s) and the lessee fail to pay the rent or any other payment obligations under the lease, the lessor is no longer required to perform its obliga - tions. The lessor can also send a notice period of 30 days to the lessee and the receiver(s) to remedy the situation. Failing that, the lease is automatically terminated. The termination of the lease for non- payment of rent means that the lessor can repos - sess the aircraft and proceed with the deregistra - tion and export of the aircraft. • Scenario 2:If the lessor wants to terminate the lease upon the issuance of the insolvency judg - ment as a result of any pre-insolvency reasons, the lessor must introduce its claim for termination before the commercial court within 30 days fol - lowing the second publication of the insolvency judgment in the newspaper. The judge will only decide to grant the termination if they consider that the lessee is unable to provide sufficient guaran - tee in respect of the payment of the rent. If the termination is granted, the lessor will be entitled to proceed with the repossession, deregistration and export of the aircraft. • Scenario 3:If the lessor wants to terminate the lease after the issuance of the insolvency judg - ment as a result of any post-insolvency reasons, the lessor must introduce its claim for termination before the commercial court within 15 days after it has been informed of the lessee’s default. The judge will only decide to grant the termination if they consider that the lessee is unable to provide sufficient guarantee in respect of the payment of the rent. If the termination is granted, the lessor will be entitled to proceed with the repossession, deregistration and export of the aircraft.
contractual obligations. The aircraft must immediately be returned to the lessor upon the occurrence of a new event of default and the lessee cannot claim any further delay. Any attempt to delay or prevent the repossession of the aircraft by the lessor after the expiry of the waiting period of 60 days is prohibited. Subject to the foregoing, which is fully recognised and applicable in Madagascar, the Cape Town Protocol does not prevent the lessor from using any remedy available in local legislation. 2.9.6 Risks for a Lender if a Borrower, Guarantor or Security Provider Becomes Insolvent If a borrower, guarantor or an entity becomes insol - vent, the main risk is the lack of sufficient assets to provide for the payments due to the creditors, includ - ing the lender, which, if it does not have a guarantee of its own (eg, a mortgage), will be deemed as any other common creditor to be paid equally in accordance with the debtor’s existing assets. 2.9.7 Imposition of Moratoria in Connection With Insolvency Proceedings No moratorium or similar stay is imposed in connec - tion with insolvency proceedings. Additionally, the declaration of the lessee’s insolvency does not sus - pend the execution of the lease agreement, but the insolvency administrator, under applicable law, can always terminate it by undertaking to pay the retribu - tions corresponding to the existing period between the date when the insolvency took effect and the end of the term established in the contract, or the date on which termination by the insolvent would have been possible. 2.9.8 Liquidation of Domestic Lessees The methods by which a domestic lessee can be liq - uidated or placed in administration or receivership are judicial reorganisation ( redressement judiciaire ) and liquidation ( liquidation des biens ). See 2.9.2 Over- view of Relevant Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receivership .
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