‘Trust companies may refuse to be exporter of record of US aircraft after NBAA guide’


A members-only guidance document produced by the National Business Aviation Association (NBAA) could support trust companies’ position to remove themselves from US aircraft export processes to avoid potential regulatory exposure, according to a contributor to the document.

David Hernandez, shareholder at law firm Vedder Price, was involved in the creation of the exclusive ‘Guide on Exporting Aircraft from the United States’ and said it was “an outstanding resource” to help the export process. Working with the US government, the guidance was released following the Wright Brothers Aircraft Title (WBAT) and Aircraft Guaranty Corporation (AGC) case, which unfolded in March last year. Debbie Mercer-Erwin, the owner of both companies, and several others were accused, among other things, of various violations of US law related to the registration and export of aircraft. So far, no one has been convicted of any offences.

Hernandez told Corporate Jet Investor (CJI): “The whole aviation industry, particularly trust companies, were completely shocked and now are extremely nervous about acting as the exporter of record as the owner trustee of aircraft given the U.S. government’s position in the AGC case.”

In the wake of the case, he said: “Trust companies have changed their business practises and will likely refuse to be involved in customs export of the aircraft or act as the US principal party of interest. They just won’t do it anymore; they likely won’t offer that service.” As a result, any non-US citizens who try to approach a US trust to act as the exporter of an aircraft, the US Principal Party in Interest (USPPI), could get “severe pushback”, he said.

He believes trust companies will distribute the guidance widely to clarify the rules on exports to non-US citizens and remove themselves from acting as the exporter of record. “This is a tool for the trust companies to explain the process and enable their customers to find alternative export arrangements with aircraft sellers and others,” he said. “Trusts will likely say: ‘We don’t need to be the USPPI because other parties involved in the transaction are better suited for the role for the following reasons’…”. 

Responding to Hernandez’s comments, an NBAA spokesman told CJI the new guide will help trust companies better understand their responsibilities in aircraft export deals.

Meanwhile, Mercer-Erwin is set to stand trial imminently. Hernandez said the Vedder Price task force, set up last year to help clients affected by the case, still receives a few calls per month about aircraft that are still held in the AGC trust. He said some clients are unsure of whether to remove them from the trust ahead of the trial. He said: “The next wave of activity would be if, worst case scenario, the trust company [AGC] collapses or shuts down.” If that happens, he said “around 700 or 800 trustees will immediately have to find new homes”. He added: “If nothing happens [from the trial] then Aircraft Guarantee will maintain the status quo and there’ll be no issues”.

Earlier this week, Scott O’Brien, senior director of public policy and advocacy, NBAA, told CJI that the guidance focused mainly on the responsibilities of trusts in a US jet export.

Read the full guidance (if you are an NBAA member)