Sale and leaseback structures and pledges of an aircraft are primary tools in Thailand for lenders to secure aircraft financing. However, these prevalent approaches come with certain limitations. Sale and leaseback structures usually require lots of documentation, while the use of pledges requires delivery of the pledged property to the pledgee and the pledged property must always remain in the possession of the pledgee or a third-party custodian as agreed to by the parties, because the pledge will be legally discharged if the pledged property is returned into the possession of the pledgor. Since 2015, there has been another alternative for securing aircraft financing in Thailand. This came with the introduction of the Business Security Act B.E. 2558 (“BSA”). The BSA allows creation of a security interest over movable property (including aircraft) as collateral to secure debt repayment or other obligations without having to deliver the property to the secured party. Therefore, it is now possible for a security interest to be created over an aircraft on a non-possessory basis. To realize this type of security interest, the BSA requires that a business security agreement be made in writing and registered with the Business Security Registration Office. Unless the parties agree otherwise, the security providers still retain the right to transfer or dispose of the secured property. However, the BSA prohibits the security providers from transferring or selling the secured property when there is a cause for enforcement of the secured property and the security receivers have notified the security providers about this cause in writing. According to the BSA, entities that are eligible to be a security holder and take business security as a secured creditor include financial institutions and other persons prescribed in ministerial regulations issued by the Ministry of Commerce or the Ministry of Finance. However,

Attorneys from Tilleke & Gibbins’ offices in Vietnam have provided the Vietnam chapter for the Aviation Finance & Leasing 2023 guide from Chambers and Partners. The guide covers the most important legal developments affecting aircraft lessors, lessees, and financiers in 32 jurisdictions worldwide. In addition to the Vietnam chapter, Tilleke & Gibbins also contributed the Thailand chapter for Aviation Finance & Leasing 2023. Each chapter provides in-depth details on the legal regimes affecting all aspects of aircraft sale and purchase, aircraft and engine leasing, and aircraft debt finance, including sale and lease agreement terms; taxation; lease registration and enforcement; lease assignment/novation; insurance and reinsurance; debt structuring; securities; liens; and many others that affect the day-to-day operations of leading players in the aviation industry. Chambers and Partners’ Global Practice Guides provide in-house counsel with expert legal commentary focusing on practical legal issues affecting business, enabling readers to compare legislation and relevant procedures across a range of key jurisdictions. The Vietnam chapter of Aviation Finance & Leasing 2023 is available as a PDF through the button below, courtesy of Chambers and Partners. The full guide is accessible for free on the Chambers and Partners website.

Aviation specialists from Tilleke & Gibbins’ Bangkok office have contributed the Thailand chapter for Aviation Finance & Leasing 2023 from Chambers and Partners. The guide covers the most important legal developments affecting aircraft lessors, lessees, and financiers in 32 jurisdictions worldwide. In addition to the Thailand chapter, Tilleke & Gibbins also provided the Vietnam chapter for Aviation Finance & Leasing 2023. Each chapter provides in-depth details on the legal regimes affecting all aspects of aircraft sale and purchase, aircraft and engine leasing, and aircraft debt finance, including sale and lease agreement terms; taxation; lease registration and enforcement; lease assignment/novation; insurance and reinsurance; debt structuring; securities; liens; and many others that affect the day-to-day operations of leading players in the aviation industry. Chambers and Partners’ Global Practice Guides provide in-house counsel with expert legal commentary focusing on practical legal issues affecting business, enabling readers to compare legislation and relevant procedures across a range of key jurisdictions. The Thailand chapter of Aviation Finance & Leasing 2023 is available as a PDF through the button below, courtesy of Chambers and Partners. The full guide is accessible for free on the Chambers and Partners website.

Thailand is not a signatory to the Cape Town Convention. This means that upon an airline-lessee’s default, a lessor cannot present an Irrevocable Deregistration and Export Authorization (IDERA) document to easily repossess an aircraft. However, Thai law does allow for lessors to obtain aircraft deregisteration without the need to go to court. Pursuant to Clause 12 of the Civil Aviation Authority of Thailand (CAAT) Regulation No. 23 (Reg. 23), the Director General of CAAT has the authority to deregister an aircraft when the possessory right to the aircraft under a lease agreement has expired for any of the following reasons: The lease agreement has expired due to the lease term; The lease agreement has been terminated by either the lessor or the lessee in accordance with its termination clause; The lessor and lessee agree to terminate the lease agreement; The lessor notifies the termination of the lease agreement and submits an irrevocable deregistration power of attorney together with an application requesting the exportation of the aircraft, and the lessor or its agent submits an application for deregistration of the aircraft to the Director General. Under Reg. 23, a lessor can submit a deregistration application to CAAT asking CAAT to deregister. The deregistration application consists of evidence of the lease termination, a deregistration power of attorney (DPOA), the applicant’s certificate of incorporation, and the aircraft’s certificate of airworthiness and Certificate of Registration. CAAT will review the application and ask the lessee if it consents to the deregistration. If the lessee does not consent, CAAT may invite the lessor and lessee to one or more administrative hearings to give evidence on the dispute. If CAAT concludes that the lease has been validly terminated and the lessee no longer has possessory rights, CAAT will deregister the aircraft. Under Thai law, a lessor