Aircraft Security Agreement and Lease Agreement Compliance Inspections

As financial institutions gain experience, it has been discovered that the prudent lender would do well by occasionally sending an independent auditor to inspect a flight department's maintenance practices, and to insure continued compliance with the security agreement.

Many a well meaning business has found itself on the short side of the profit margin, and found it convenient to cut corners in the flight department budget, which according to the "trickle down theory" equates to the aircraft maintenance budget. I am not sure why it happens this way, but we have seen it time after time.

Fortunately most of the time this is a short term problem and is usually resolved, with the aircraft maintenance status being brought up to date.

In the unfortunate event that the aircraft owner never recovers financially, the financial institution is faced with having to recover the collateral, which may or may not be in an airworthy condition.

That is where we come in. We have the resources to inspect the records and perform operational checks of the aircraft to determine what, if anything will be required to make the aircraft airworthy and marketable once again. One function is to investigate, and another is to advise or consult, so that the lender recovers as much as possible from the collateral in a reasonable amount of time and money.

With the ever increasing scrutiny of aviation related financial institutions over the manner in which the collateral (the aircraft) is maintained, independent inspectors are being utilized and sent out, not only to inspect records but also to observe the manner in which the operator is utilizing the aircraft and conducting its business.

A professional independent inspector with many years experience in the aviation industry can gather a wealth of information about an operator by simply being friendly and acting like he's not exactly sure what is going on. The good or bad signs of how things are going can really not be taught. They are more like the "you had to be there" story.

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