PANAMA Law and Practice Contributed by: María de Lourdes Marengo and Joaquín De Obarrio, Patton Moreno & Asvat
3.2.2 Types of Security Not Available There are no types of security that cannot be taken over an aircraft or related collateral. 3.2.3 Trust/Trustee Concepts The concept of a trust and the role of a security trustee are recognised under Panamanian laws. 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 a mortgage, its rights to the aircraft under an aircraft lease. 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations It is possible to assign only the rights and benefits, without also assigning the attendant obligations of the lessor, under an aircraft lease. 3.2.6 Choice of Foreign Law Security assignments and guarantees may be gov - erned by English or New York law. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments Foreign law-governed security assignments are not subject to registration in Panama. In case of enforce - ment in Panama, the security assignment must be translated into Spanish by an official translator in Pan - ama, notarised and legalised according to the 1961 Hague Convention on the Apostille. 3.2.8 Domestic Law Security Instruments In addition to English- or New York law-governed security assignment in respect of an aircraft, financi - ers must take an aircraft mortgage. Registration of the aircraft mortgage with the Public Registry Office is required for validity and the creation of the lien on the aircraft. The cost of registration of the mortgage is USD100.00 plus USD2.50 for each USD1,000.00 or fraction thereof of the amount secured by the mort - gage with a cap of USD51,250.00.
nian law. These guarantees are not subject to registra - tion. No consideration or corporate benefit is required. 3.1.5 Lenders’ Share in Security Over Domestic SPVs It is advisable for lenders to take security over domes - tic or foreign special purpose vehicles that own the financed aircraft. A pledge of shares is recognised under Panamanian law. 3.1.6 Negative Pledges Negative pledges are recognised under Panamanian law. 3.1.7 Intercreditor Arrangements There are no material restrictions or requirements imposed on intercreditor arrangements. 3.1.8 Syndicated Loans The concept of agency and the role of an agent under a syndicated loan are recognised under Panamanian law. 3.1.9 Debt Subordination Subordination agreements between lenders are per - missible and recognised subject to priorities deter - mined by operation of the law. 3.1.10 Transfer/Assignment of Debts Under Foreign Laws The transfer or assignment of all or part of an out - standing debt under English- or New York law-gov - erned loan is permissible and would be recognised under Panamanian law. 3.1.11 Usury/Interest Limitation Laws There are no usury or interest limitation laws under the laws of the Republic of Panama. 3.2 Security 3.2.1 Typical Forms of Security and Recourse The typical form of securities and recourse granted in aviation finance are aircraft mortgages, pledges of shares, guarantees issued by parent companies, assignment of insurances and rights in general.
3.2.9 Domestic Registration of Security Assignments Governed by Foreign Laws
English or New York law governed security assign - ments cannot be registered domestically. Security in
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