Paradise Found For Private Aircraft Financing

Bermuda has historically been and remains an attractive jurisdiction for lenders involved in the financing of the acquisition of both private and commercial aircraft. Often in the case of a private aircraft acquisition, a special purpose company or an individual (the "Borrower") will borrow funds from a bank (the "Lender") to purchase an aircraft. Unlike in a commercial transaction, the acquisition of the aircraft shall be for the Borrower's private use. Therefore, there will not be an operating lease but instead there will usually be a management agreement with an air management company. The purchase price is usually advanced to the Borrower at the time of delivery by the Lender, and the property in (and possession of) the aircraft transferred to the Borrower at the same time as the seller is paid. Concurrently with the purchase of the aircraft, the Borrower will issue a mortgage over the aircraft in favour of the Lender along with other customary security.