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Source: The post is based on the article “Govt. eases aircraft recovery rules” published in “The Hindu” on 5th October 2023
What is the News?
Government has notified that the protection offered to a corporate debtor from recovery of dues under the Insolvency and Bankruptcy Code 2016 will not cover aircraft, helicopters and engines.
This change will make it easier for lessors to recover their planes in case an airline goes bankrupt.
Note: These changes were made after several experts said that earlier rules were in contravention of the Cape Town Convention and Protocol of 2001 to which India is also a signatory.
What is the Cape Town Convention?
Source: Livemint
Cape Town Convention on International Interests in Mobile Equipment, or Cape Town Treaty was signed in 2001 and became effective in 2006.
The convention was adopted under the International Civil Aviation Organisation (ICAO) and the International Institute for the Unification of Private Law (UNIDROIT).
The convention aims to solve problems of obtaining certain rights to aviation assets such as aircraft engines, helicopters and airframes, which, by their nature, have no fixed location.
The Convention guarantees the rights of lessors to repossess leased high-value equipment such as aircraft, engines, and helicopters in case of payment defaults.
