CORPORATE TRANSACTIONS & COMPLIANCE BLOG

Growth in Aviation Financing Increases the Demand for Process Agent Services

By: Pushkala Sivaramakrishnan, COGENCY GLOBAL INC. on Mon, May 05, 2014

Fueled by strong economic growth, high demand for commercial aircrafts and increasing popularity as a lucrative investment avenue, aviation financing in Asia has been on the rise. Industry observers note a recent trend shifting investment in aviation assets from European banks to banks in Asia that is likely to continue[1]. As reported in a Bloomberg article dated February 16, 2014, “Singapore $32B Plane Spree Anything but Plain Vanilla,growth in the aviation financing industry in Asia is expected to be explosive. It was reported that “close to half the world’s air traffic growth will involve Asian routes over the next 20 years.”

Appointment of a Process Agent Often Required in Aviation Finance 

Process AgentLenders in Asia involved in aviation financing often require the appointment of a New York or UK process agent. The process agent (also referred to as agent for service of process or contract agent) serves as a point of contact in the jurisdiction where the parties may not have a presence so that legal process related to the transaction’s operative agreements may be served.

New York and the United Kingdom are both widely recognized as preeminent commercial and financial centers. Both have substantial bodies of common and statutory law addressing a broad range of commercial and financial matters that afford parties guidance and predictability, should any legal proceeding be commenced.

Importance of Process Agent

As aviation finance continues to grow, especially within Asia, there is likely to be an increase in financing transactions that require a process agent. While appointing a process agent is only one condition precedent (in addition to the more material financial considerations negotiated among all parties to the transaction), it is important that the company appointing the process agent understands the role of the process agent and develops a relationship with a trusted process agent partner. It is not uncommon that an initial aviation finance arrangement may be amended for a variety of reasons, including novation. Developing a relationship with the original process agent will be helpful in supporting the ease of future amendments among the parties.


[1] PricewaterhouseCoopers LLP, “Aviation Finance - Fasten Your Seatbelts,” January 2013

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: Process Agent