MALTA Law and Practice Contributed by: Joseph Ghio, Fenech & Fenech Advocates
2.9.6 Risks for a Lender if a Borrower, Guarantor or Security Provider Becomes Insolvent The main risks for a lender depend on whether or not security for the loan exists. In the case of an unse - cured loan, the lender will rank pari passu with other creditors with the risk of recovering only a part of the debt. As regards registered mortgages, special privileges and all actions and claims to which an aircraft may be subject, such shall not be affected by the bankruptcy and/or insolvency of the mortgagor or owner occur - ring after the date on which the mortgage was created or the special privilege, action or claim arose. 2.9.7 Imposition of Moratoria in Connection With Insolvency Proceedings As a general rule, creditors cannot take legal action against a company in liquidation unless authorised to do so by the competent court. However, an excep - tion exists with respect to a lessee in the context of a lease of an aircraft. Maltese law provides that such a lease shall be immediately dissolved or terminated by the lessor at any time in the event of a default which includes the insolvency of the lessee. Such dissolu - tion or termination allows the lessor, after notice to the lessee, to take possession of the aircraft (including an aircraft engine) without first obtaining court authorisa - tion. 2.9.8 Liquidation of Domestic Lessees Apart from the methods outlined in 2.9.2 Overview of Relevant Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receivership as regards liquidation, a Maltese les - see can also be dissolved and wound up when the shareholders thereof resolve to dissolve it and where, in the opinion of the directors, the company is solvent. 2.9.9 Ipso Facto Defaults Ipso facto defaults are recognised and can form the basis on which an aircraft is repossessed during a lessee insolvency proceeding. 2.9.10 Impact of Domestic Lessees’ Winding-Up As regards the impact on the aircraft and the lease rentals, see 2.9.5 Other Effects of a Lessee’s Insol - vency .
The lease security deposit and the maintenance reserves (whether classified as reserves or supple - mental rent) would depend upon whether such depos - it and reserves have been transferred to the lessor or not. In the latter case, such are expected to fall within the general pool of assets for distribution to creditors generally according to their ranking. 2.10 Cape Town Convention and Others 2.10.1 Conventions in Force The Convention and the Protocol have the force of law in Malta. It is not necessary to obtain “authorised entry point” (AEP) codes for registering international interests. 2.10.2 Declarations Made Concerning Conventions Malta has made declarations under Articles 39 (1)(a) and (4), 40, 53 and 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. The procedure for submitting and recording the IDERA in the Register is as follows. • The IDERA has to be submitted in writing to the Authority substantially in the form set out in Annex 1 to the Second Schedule of the Act identifying an aircraft registered or to be registered in the Regis - ter and signed by the registrant of the aircraft, or if the registrant is not a natural person, by a person who is duly authorised to represent the registrant including by means of a power of attorney. • Two copies of such an IDERA are to be submitted to the Authority and the latter will acknowledge receipt of that IDERA by executing one such copy and returning it. • If the IDERA indicates that it was signed in Malta, it will be accepted by the Authority without additional formalities. However, an IDERA that indicates that it was signed outside Malta will be accepted by the Authority if notarised locally to the satisfaction of the Director General and the Director General in his discretion may also ask that the IDERA is duly apostilled or legalised.
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