Issue link: https://mbozikis.ufcontent.com/i/1422521
139 3. Aircraft Equipment and Vessels Section 1110 of the Bankruptcy Code affords special protections to certain secured parties, lessors, and conditional vendors by allowing such parties, notwithstanding the commencement of a Chapter 11 case and the applicability of Sections 362, 363 and 1129 or any general injunctive power of a court, to exercise their nonbankruptcy rights and take possession of qualifying aircraft equipment or watercraft pursuant to an underlying security agreement, lease or conditional sales contract. 75 However, these protections only apply if the trustee 76 does not agree to perform under such agreement and to cure certain defaults. 77 11 U.S.C. ยง 1110(a). To qualify for protection under Section 1110, the aircraft equipment must be: an aircraft, aircraft engine, propeller, appliance, or spare part (as defined in section 40102 of title 49) that is subject to a security interest granted by, leased to, or conditionally sold to a debtor that, at the time such transaction is entered into, holds an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of title 49 for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo. 75 For purposes of Section 1110, with respect to equipment that was first placed into service on or before October 22, 1994, (a) the term "lease" is limited to any written agreement in which the lessor and the debtor, as lessee, have expressed in the agreement or in a substantially contemporaneous writing that such agreement is to be treated as a lease for Federal income tax purposes and (b) the term "security interest" is limited to a purchase-money equipment security interest. 76 As described in more detail in Chapter VI.A. below, references to a trustee in the Bankruptcy Code are interpreted to include a debtor-in-possession. 77 The only defaults that are not subject to this cure requirement are defaults under ipso facto or bankruptcy clauses (discussed above at Chapter V.E.3.e.).