Last chance saloon: Repossessing aircraft with IBA
Owen Geach and Ben Jacques from IBA shed some light on finer points of aircraft repossession, and the hostility that occasionally comes with the job.
“If people don’t think they can afford to pay their bills or feed their kids, they will be hostile.”
Although the idea of repossessing business jets from exotic tax havens might sound like the premise for a summer blockbuster, it’s a position which no lender ever wants to find themselves in.
The reality of aircraft repossession is that it’s usually an arduous process which spells out failure from both sides of a deal. But with some high-net-worth individuals becoming low-net-worth overnight, sometimes it’s simply unavoidable.
With its offices located in a leafy London suburb, the International Bureau of Aviation (IBA) is a full-service aviation consultancy. As well as dealing with aircraft appraisal and related consultancy, the company also offers technical and asset management support, and from time to time, will act as repossession agent.
While the vast majority of repossessions pass without incident, the company is keen to stress that repossessing an aircraft, is certainly not something to be taken lightly. “It is essential that you assess what the overall cost is going to be – not just for the physical act of repossession, but going forward as well,” says commercial director Owen Geach.
Nodding in agreement, Ben Jacques, commercial manager, concurrs that that the act of repossession is rarely a financier’s best option. “I’d probably say that 70-80% of our repossession jobs never actually turn into a repossession, because the bank realises that the
costs outweigh a way of making it work,” he says.
How did you both end up in aviation?
Ben Jacques: “I had a childhood fascination with aviation. I originally had plans to become a pilot, as many boys do. But as things turned out, I started my career in aviation in the operational side of the airport, where I learnt a lot about the industry and what actually happens on the ground. Later on, I moved into charters and leasing. The skills and knowledge learnt there lead me towards risk-management and safety quality, which in turn brought me to IBA.”
Owen Geach: “I started life out in banking before moving to work for Thomas Cook. I joined IBA in an administrative capacity in 1994, moved into sales and marketing in 1999 and held a variety of positions within the company. I then worked for Bureau Veritas, the French certification company for four years, and rejoined IBA in 2007 as commercial director. I’ve been involved in a lot of projects where aircraft repossession has been one of the services that we offer; some projects have lasted a week, some of them have lasted 18 months.”
What is your process for repossessing an aircraft?
Geach: “No two repossessions are ever the same. Quite often I get asked by banks to provide the typical or likely repossession costs. The short answer is that there isn’t a blueprint for doing it. The best executed repossessions are those that are not kneejerk but are carefully thought through – where the legalities are observed and the client is aware of the costs that they will incur during the repossession process and afterwards.
“In an ideal world, one would want to issue a pre-repossession feasibility warning, which could be used to send a gentle message that the bank or the lender is treating the situation very seriously. It also establishes where the aircraft is and where the records are, where it flies to and whether it is in flyable condition.”
What comes after the inspection?
Jacques: “Having gone from preliminary inspections, it entirely depends on the urgency. Typically on a friendly hand-back, the operator is fully compliant, but on a hostile repossession, things couldn’t be more different. There are stories of people scaling fences, starting up the engines at three in the morning and flying out with the records on board.”
Geach: “Nine times out of ten, the lender will have sought a high court order for the repossession of the aircraft, but there are exceptions to that.”
Jacques: “I had a case last year where the owner had given the aircraft to an agent. The agent hadn’t managed to find a willing buyer in the suggested time frame, and the owner wanted it back.”
What is your involvement with the overall process?
Geach: “We deal with serving legal documentation, negotiating and liaising with the airport authority, making the arrangements for moving the aircraft into secure storage, sourcing ferry flights, validating insurance as well as the flight planning. We will turn-key manage the whole process for our client. We don’t keep fuel on reserve or have pilots on the payroll though, so on that level, we do contract out.”
What staff do you need to bring in?
Jacques: “Typically, you’ll need somebody who will understand what they’re looking at in terms of records, somebody who’ll sign off the aircraft. Beyond that you need somebody who understands the commercial side of it and you may need a lawyer to help with any ‘stickiness.”
How should you conduct yourself during a repossession?
Geach: “If you’re going to execute a repossession, you need to be knowledgeable and experienced of course, but it is also essential that you are confident, assertive and courteous. At the end of the day, you are the legal representative for the lender, and being rude, abrasive or threatening is unlikely to work.”
Jacques: “You need the upmost respect. If you’re repossessing a corporate jet, there will be a high-net worth individual or a company who won’t want their reputation soured. You might be wearing a hi-vis jacket on an airfield, but not only are you representing your company, you are representing your client or a legal team, and you need to remember that the aircraft will need to be resold for the
highest value possible – so your professionalism is very important.”
What about the times when you can’t control the situation?
Jacques: “We were recently commissioned to manage what would likely be a hostile repossession at Heathrow. Immediately, we started to consider the factors that were going to cause us problems. We take the view that, if the owner or operator is going to be hostile, then let’s make it as friendly as possible with everyone else involved. By that, I mean the airport authority, the catering company, the cleaning company, the ground handling company and so forth. If you can get all of them on side and have a good understanding of each other, you can generally find ways to save everybody’s time.
“We’re in a very fortunate position where, because of the work we do with airports, regulators and airlines, we will almost always know somebody, whether it’s in Italy, France or Spain, who will help to make the whole process ‘friendlier’ and run more smoothly. But if that can’t be done, then they will still assist us in navigating through the maze of various hostilities.”
Do you come across much hostility in your jobs?
Jacques: “In repossession, there’s fight, flight or friendly. There are people that will try to grab the computer off their desk and run away, and there are people who realise that if they help us, they could get employment for another few weeks with the administrators. But then on the other hand, one of our chaps was threatened to have his knees broken a few years ago – but that type of thing is very rare.”
Would you agree that repossession is a last resort?
Geach: “I think the act of repossession is a last resort, but the threat of repossession can be useful sometimes as it demonstrates how serious you are.”