Cap. 503 Art. 28Attachment and extinguishment of charges and other rights. Cap. 16.

(1) A registered mortgage shall attach to the aircraft or share therein in respect of which it is registered until it is discharged.

(2) Where the aircraft has been forfeited under an applicable law, the interest of the mortgagee in the aircraft shall terminate if such person has authorised, consented to, or conspired, to the act, failure or omission in consequence of which the aircraft is forfeited.

(3) Where an aircraft has been sold pursuant to an order or with the approval of a competent court within whose jurisdiction the aircraft was at the time of the sale, the interest of the mortgagees as well as that of any other creditor in the aircraft shall pass on to the proceeds of the sale of the aircraft.

(4) Where an aircraft has been sold by a mortgagee in possession, in enforcement of such mortgage pursuant to his rights in terms of this Part and it is stated in the bill of sale that the aircraft is being sold free from such encumbrance, then -

(a) the rights arising from such registered mortgage shall no longer be exercisable in relation to that aircraft; and

(b) all rights of other creditors, including those of other registered mortgagees which rank after the said mortgage shall no longer attach to the aircraft; and

(c) all rights of other creditors which rank before the said mortgage shall be exerciseable against the proceeds of sale by whosoever held, but shall no longer attach to the aircraft.

(5) The creditor selling the aircraft to enforce his mortgage shall be bound to act in a commercially reasonable manner and shall be bound by fiduciary duties towards the debtor and other creditors when effecting a sale of the aircraft and shall be bound to:

(a) pay from the proceeds which he receives any creditor who ranks prior to his rights as he may determine or as may be determined by the court in case of disagreement; and

(b) provide information to any creditor whose rights rank after his own rights and to the debtor for the conditions of sale, the expenses incurred, the prior rights settled and any other deductions from the price received.

(6) Any hypothec or privilege whether general or over particular movables to which an aircraft may be subject under the provisions of the Civil Code shall not continue to attach to it when the aircraft is transferred to third parties.