The Oklahoma Bar Journal October 2024

closing, and any required IR reg istrations were made. Hooray! The sourdough loaf is rising, there’s bright sunshine outside, more coffee beans are found and parties avoid being left in a lurch!

resolve the issues under contractual arrangements and/or local laws before any filings can be made at the FAA. Although this jumps ahead a bit, it’s helpful to identify the end objective from an FAA and IR per spective, as this should determine a practitioner’s actions throughout the resolution of the issue under local law and/or the UCC. Unfortunately for the non- defaulting party, the fact that the FAA accepted a document into its files or recorded it in the aircraft records cannot be relied on to support a validity or enforceability argument. 18 The FAA assumes that a document is valid on its face and will accept or record it so long as the FAA registry requirements for acceptance or recordation are met. 19 Therefore, a practitioner should not plan on using acceptance or recordation as support for a particular position in any local law or UCC proceeding. If possible, parties have the option to resolve matters at the FAA using filings that would be utilized

electronic registry known as the International Registry (IR) was established to record interests in airframes and engines, as well as registration of sales.

NAVIGATING FAA AND IR REQUIREMENTS FOR

HANDLING DEFAULTS AND DISPUTES

AIRCRAFT TRANSACTIONS It’s important to note that not every piece of an aircraft can be perfected at the FAA registry or on the IR headquartered in Dublin, Ireland. FAA regulations limit eligibility for recordation based on the type, weight and capacity of airframes, engines and propellers and also include locations of spare parts for U.S. certificated air carri ers. 16 The IR mirrors the weight and capacity limits but only applies to airframes and engines. 17 So what does all this mean for an aviation transaction? If done right, a review of the transac tion binder should reveal that all necessary local law, UCC and FAA filings occurred at the time of

After the euphoria has ebbed, it’s time to talk about actions. Aircraft transactions can be structured in numerous ways, and the position of the defaulting party impacts what filings need to be made at the FAA. A common scenario is that a borrower under a loan and aircraft security agreement defaults with no other interests perfected at the FAA. Another such example is if an air craft that is financed with a perfected lease experiences a lessee default. Although less common, it’s also possible for a borrower of a financed and leased aircraft to default, but the lessee has not defaulted. In all the above scenarios, steps will first need to be taken to

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

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THE OKLAHOMA BAR JOURNAL