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Courts Override Underlying Contractual Obligations In The Chapter 11 Surrender And Abandon Of Aircraft Equipment And Vessels, Lisa Strejlau

Bankruptcy Research Library

(Exceprt)

When chapter 11 airline debtors seek to abandon and surrender collateral under a financing agreement, they are not required to do so in any particular condition under the Bankruptcy Code. This leaves the question of who bears the burden of associated costs unresolved. This memo will discuss how courts interpret the issue of costs associated with the surrender and return of aircraft and related equipment.

Financers of aircraft and related equipment receive special privileges under section 1110 of the Bankruptcy Code (“the Code”). Section 1110 permits a party to take possession of an aircraft in the custody of a …