Lawyers Don’t Often “Kill” Aircraft Deals. . .

But They May Put a Bad Deal Out of its Misery

 There is a familiar complaint in aircraft transactions:

The lawyers killed the deal.

More often than not, counsel exposes risks already embedded in the transaction.

Aircraft deals involve more than price and a bill of sale. They require coordination of:

• • inspection;
  • title and FAA filings;
  • tax and ownership structure;
  • financing and insurance;
  • delivery and acceptance; and
  • operational and closing logistics.

The real question is whether counsel identified a deal that should not proceed, or mishandled one that should.

When Stopping the Deal Is the Lawyer’s Job

Counsel is not retained merely to document the client’s enthusiasm.

A lawyer may properly advise against proceeding when:

• • the buyer is asked to waive the pre-purchase inspection;
  • the aircraft does not fit the buyer’s mission;
  • records are incomplete;
  • damage or title issues exist;
  • major maintenance is approaching; or
  • the tax or operating structure creates unacceptable risk.

Effective counsel should explain:

• • the risk;
  • the likely downside;
  • whether it can be investigated or priced;
  • whether it can be insured or contractually allocated; and
  • whether a practical solution exists.

That is not killing the deal. It is informed decision-making.

When Lawyers Create Unnecessary Friction

Some lawyers inadvertently obstruct aircraft transactions because they lack aviation experience.

They may:

• • treat routine aviation requirements as unusual;
  • over-negotiate immaterial issues;
  • import unsuitable provisions from other industries;
  • misunderstand FAA or International Registry procedures; or
  • fail to coordinate the closing sequence.

Aircraft closings often require simultaneous coordination among the parties, escrow agent, lender, broker, maintenance facility, insurer, FAA filing desk, and International Registry users.

Routine does not mean trivial. It means experienced professionals know how to manage the process efficiently.

The Parties May Not Have Agreed on the Same Deal

The buyer may expect:

• • a specified delivery condition;
  • complete records;
  • no undisclosed damage;
  • transferable maintenance-program coverage; and
  • a clean closing.

The seller may believe the aircraft is being sold strictly:

• •  “as is, where is.”

Counsel often becomes the first person to expose that gap.

Tax and Structure Must Be Addressed Early

Ownership, delivery location, leasing, operational control, personal use, depreciation, and state tax exposure can materially affect the transaction.

These issues may not be fixable after closing.

Experienced counsel raises them early so the structure, documents, delivery, and actual operations remain consistent.

So Who Really Kills the Deal?

Sometimes it is:

• • the aircraft;
  • the inspection;
  • the records;
  • the maintenance outlook;
  • the tax structure;
  • the financing;
  • the parties; or
  • inexperienced counsel.

The purpose of aviation counsel is neither, to kill the deal, nor close it at any cost.

The purpose is to help the client complete the right transaction, on informed terms, with risks that are understood and intentionally accepted.

The lawyer who exposes a bad deal has not killed the deal, but rather saved their client.

The lawyer may simply be the first person willing to admit that the deal on the table is not the deal everyone thought they had.