knowledge | 12 May 2017 |

Ireland adopts “Alternative A”

The Irish Government has confirmed that the long-heralded Order to give effect to the “Alternative A” insolvency provisions of the Aircraft Protocol to the Cape Town Convention has been signed.  While the Order has not yet been published, the Government announcement, made on 10 May 2017, states that the change in law has immediate effect.


Ireland was the first European country to give effect to the Cape Town Convention and the Aircraft Protocol in its laws, but when it acceded to the Convention and Protocol in 2005 it did not make a declaration in respect of the insolvency alternatives set out in Article XI of the Protocol.

In practice, the most significant consequence of this was that the rules relating to examinership (Ireland’s domestic corporate insolvency rescue procedure) continued to apply without modification to creditors’ rights in respect of aircraft objects.  Crucially this meant that where the debtor had entered into examinership, a creditor (eg lessor or mortgagee) could not take any enforcement action during the examinership protection period which could last for 100 days or longer.  This moratorium applied equally to a creditor’s exercise of domestic Irish law remedies and the exercise of its rights under the Convention and Protocol.  Moreover, in certain circumstances the creditor’s contractual rights could be varied as a result of the examinership procedure.

The new position under “Alternative A”

In giving effect to “Alternative A”, Ireland has modified the examinership regime so that for leasing, conditional sale and security arrangements that fall within the scope of the Cape Town Convention, the insolvency officer of the debtor will be required to either:

  • cure all defaults under the relevant agreement within 60 days of his appointment and agree to perform all future obligations owed to the creditor under the agreement (in which case the debtor may retain possession of the aircraft); or
  • at the end of the 60 day waiting period, give possession of the aircraft to the creditor.

During the 60 day waiting period the insolvency officer must preserve the value of the aircraft and maintain it in accordance with the agreement between the debtor and creditor.   During the waiting period, the creditor is also entitled to apply for other forms of interim relief available under applicable law.


More than 50% of the world’s leased aircraft are leased from Ireland.  By adopting the “Alternative A” regime, the Irish Government has reaffirmed its long-standing commitment to the aircraft leasing and financing industry in Ireland.  It also brings our insolvency regime for aircraft objects in line with that applicable in many other jurisdictions, including the UK, the USA and Canada.  It should open the way for financing structures using Irish vehicles that have not been available up to now (including EETCs – and not necessarily confined to EETC’s issued by Irish airlines).  It should also give Irish-based borrowers access to a lower cost of funds from certain lenders.  

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.

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