We are very excited to welcome our new Paris team, as we have now been joined by partner Victoria Westcott and counsel Florent Rigaud, as well as senior associate Elaine Porter (joining shortly) and associate Abdullahi Mohammed.
This new team brings significant diversification to Reed Smith’s global asset finance capability, adding particular expertise in working with lessors to our existing strengths on the financing and airline sides. Our colleagues in Paris are currently the only English and French law qualified team practising in both the English and French languages, giving us a unique ability to serve our clients not only in the United Kingdom and Europe, but throughout the Francophone world.
Florent’s client base includes a number of operating lessors, and he has kindly agreed to be interviewed for our blog – we hope you enjoy!
How did you come to work in aviation?
The most accurate answer is probably by accident. At the time I was finishing my Paris Bar studies and because I was qualified in French business and finance law, I was looking for a position in a finance practice in one of the top international law firms based in Paris. There were no aircraft finance studies as such in France but I then met Victoria Westcott and Thomas McDonald for an interview. Both were partners in asset finance at White & Case in Paris. I joined their team a few days later and started getting involved in aircraft finance transactions.
What is it that you enjoy most about working in this industry?
I have to admit that I like being involved on matters which relate to large physical “flying” assets such as aircraft which carry with them in the human imagination dreams of liberty, travel and progress. After almost 10 years of experience, the aviation sector is also a world where almost everyone knows each other in the industry. Although I am involved in all types of asset finance transactions for aircraft, shipping, railway, satellites and other large mobile assets, I most enjoy assisting our aviation clients on a day-to-day basis, either for secured and unsecured debt financings, operating, finance and tax-based lease structures, export credit agency-supported financings, or aircraft sales, purchases and lease novations. I represent domestic and international commercial banks as well as owners and lessors and I also have extensive experience advising international aircraft lessors on finance, corporate, administrative and other general legal aspects in connection therewith in France.
What, do you think, are the three most important issues that lessors will grapple with in 2018?
In a global environment of potential increases in interest rates, the price of the financings will be of a concern for the lessors, in particular given that there are still uncertainties as to when and under which conditions the ECA-supported aircraft financings will be resumed. The projections as to the growth of the aviation industry in Asia are also significant and the lessors will with no doubt look to strengthen their efforts and offerings in Asia so as to be well positioned in this huge market. Finally, the positive macro trends in the aviation market as a whole will probably whet the appetite of new actors in the industry; the lessors will certainly be careful with new lessees which might be weaker than they initially appear.
We saw three European airline insolvencies in 2017 – in terms of documentation, how can we best help lessors to mitigate the risk of lessee insolvency?
In terms of drafting, the definition of the insolvency proceedings and related provisions will need to be drafted carefully and be sufficiently wide in order for the lessors to fully capture any event which may lead to an insolvency scenario of a lessee and also enable them to have the ability to force the lessee to sit down and discuss terms before they reach an actual insolvency scenario, or alternatively to start enforcing some security or take the aircraft out of the hands of the lessee. Cross default and financial ratio events of default can also be used to give lessors warning signals and allow them to take action before the lessee’s financial situation deteriorates to an insolvency scenario. The provisions related to security, such as deposits and maintenance reserves, will also need to be drafted in a way that enables such security to be commingled and legally transferred to the lessors’ estates in order to avoid, as much as possible, any challenge from a judicial administrator of a lessee which is subject to insolvency proceedings. We may also look to strengthen some covenants. Detailed reporting and information covenants should not be forgotten as they allow the lessors to closely monitor the business and commercial activity of their lessees. Although not yet standard, financial covenants could be used on a more frequent basis (such as ebitda vs. net debt, minimum cash, etc.). Finally, a fully legal analysis on the jurisdiction(s) where the lessee operates should be completed in order for the lessors to consider how the aircraft can be taken away from the lessee in the case of an insolvency. As a general practice, jurisdictional questionnaires are well established on the part of the major lessors.
What do you find most exciting about joining the Reed Smith team in Paris?
To me joining Reed Smith represents a very exciting new challenge for the coming years. Although the aircraft finance expertise is very strong and well developed across Reed Smith’s offices all over the world, the practice was not yet established in Paris. I am therefore proud to be involved in such a challenging process and very happy working with my former “aviation” colleagues who have also joined the new practice. I also have to say that all the partners, associates and staff have made me feel comfortable and the firm has a very welcoming culture. I now look forward to assisting our clients under the Reed Smith brand!