Cape town Treaty

October 6, 2023

The Ministry of Corporate Affairs has issued a notification to quash a key provision of the Insolvency and Bankruptcy Code (IBC) with respect to aircraft, aircraft engines, airframes and helicopters, which will make it easier for lessors to recover their planes in case an airline goes bankrupt.
The notification states: “The provisions of sub-section (1) of section 14 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), would not be applicable to transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters.”
The Cape Town Convention on International Interests in Mobile Equipment, or Cape Town Treaty, which was signed in 2001 and became effective in 2006, lessens the risks of lending for aircraft lessors and financiers, and for parties involved in aircraft purchasing and leasing.
The Cape Town Treaty was formulated to make it easier for lessors to take back aircraft if airlines defaulted on payments.
- It was adopted by India in 2008.