MALTA Law and Practice Contributed by: Joseph Ghio, Fenech & Fenech Advocates
Such public registrations are not required for the agreement to be binding between the parties and are accordingly rarely made. 3.1.8 Syndicated Loans The concept of agency and the role of an agent under a syndicated loan are recognised. 3.1.9 Debt Subordination There are no prohibited methods of debt subordina - tion. 3.1.10 Transfer/Assignment of Debts Under Foreign Laws The transfer or assignment of all or part of an out - standing debt under an English or New York law-gov - erned loan is permissible and recognised subject and pursuant to the Rome I Regulation. 3.1.11 Usury/Interest Limitation Laws See 2.6.8 Limitations on Lessors’ Actions Following Termination . 3.2 Security 3.2.1 Typical Forms of Security and Recourse The typical forms of security and recourse granted in an aviation finance transaction domestically come in the form of: • a mortgage over the aircraft in terms of the Act; • an international interest over aircraft objects in terms of the Convention; • a recorded IDERA and/or PoA issued in favour of the financing entity by the registrant of the aircraft; and • a pledge over the shares of the borrowing SPV. 3.2.2 Types of Security Not Available Under Maltese law, an aircraft or aircraft engine may constitute security for a debt or other obligation either by agreement (including a mortgage or a pledge) or by operation of the law (special privileges). However, the following should be noted. • Any security over the aircraft shall not extend to any engine attached to the airframe when such engine does not belong to the owner of the air - frame who has granted the security.
• As regards a mortgage, only a registered aircraft or a share in such aircraft may be the subject of a mortgage and such will attach to any proceeds from any indemnity arising from any mishaps as well as any insurance proceeds (except for an indemnity payable under a liability policy). • As regards an international interest in terms of the Convention, such interest applies in respect of aircraft objects (airframes, aircraft engines or helicopters). • As regards aircraft engines and other separate items belonging to the debtor, the creditor may request that these be transferred/assigned to their benefit by way of security or request that they are pledged in their favour. Such engines or separate items may also be encumbered by means of a general hypothec over all the assets of a debtor existing at the time. 3.2.3 Trust/Trustee Concepts The concept of a trust and the role of a security trustee is recognised in Malta. 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee A borrower may assign to a security trustee pursuant to a security assignment or to a mortgage its rights to the aircraft or under an aircraft lease (including in relation to insurances). 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 a guarantee governed by English or New York law will be fully enforceable sub - ject to and pursuant to the Rome I Regulation. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments Article 2095F of the Civil Code lays down the requi - site formalities for the validity of a security assign - ment under Maltese law. Ownership of the property is acquired by the creditor as soon as the debtor and/or lessor under an aircraft lease. 3.2.6 Choice of Foreign Law
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