Aircraft Financing

Aircraft and shares therein may constitute a security for a debt or other obligation either by agreement or by operation of the law. Malta’s Aircraft Registration Act (the ‘Act’) provides a creditor-friendly framework and implements the Cape Town Convention on International Interests of Mobile Equipment and the Aircraft Protocol (the ‘Convention’) which further enhances the protection given for secured creditors.

The Act provides for various forms of security interests over aircraft particularly:

  • The registration of mortgages;
  • The recognition of international interests, without needing to re-register the said interest in the National Registry;
  • The recognition of foreign mortgages, provided that certain conditions are satisfied;
  • The possibility of executing and registering a mortgage in favour of a security trustee. Should this structure be adopted, the security trustee shall be recognized as the mortgagee and will be entitled to exercise all the rights that are accorded to the mortgagees.


According to Maltese law, an aircraft constitutes a separate and distinct asset within an owner’s estate for security of actions or clams to which the aircraft will be subject. Therefore, an aircraft that is providing securing for a debt or obligation will be insulated from third party claims which are not specifically related to the aircraft.

Mortgagees are also given a number of remedies in case of default of any terms and conditions of a registered mortgage particularly:

  • Taking possession of the aircraft;
  • Selling of the aircraft;
  • Applying for any extensions, pay fees, receive certificates and generally do all things in the name of the owner in order to maintain the status and validity of the registration of the aircraft;
  • Leasing the aircraft in order to generate income;
  • Receiving any payment of the price, lease payments, and any other income which may be generated from the operation and management of the aircraft;
  • Procuring the de-registration of the aircraft; and
  • Procuring the export and physical transfer of the aircraft from the territory where it is situated.


Moreover, if the owner of the aircraft suffers insolvency or bankruptcy, all actions and claims to which the aircraft is subject shall take preference over all other debts of the estate. Recent amendments to the Act in 2016 have also introduced specific regulations in relation to aircraft owning companies which specifically derogate from the rules applicable to the dissolution and winding up of companies generally, with the specific aim of safeguarding the interests of financiers and creditors in the event of insolvency.

For more information on how DF Advocates can assist you with any of your aviation law requirements, kindly contact us on info@dfadvocates.com.


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