Of much greater significance are the provisions of the Aircraft Protocol relating to
insolvency.
Article XI, which depends on an opt-in by the Contracting State that
is the primary insolvency jurisdiction, has two alternative forms: Alternative A
and Alternative B.
Alternative A is based on § 1110 of the US federal Bankruptcy
Code23 and provides that unless the debtor or the insolvency administrator cures
all defaults (other than the insolvency) and agrees to perform all future obligations
under the agreement before the end of the waiting period, possession must be given
to the creditor.
There can be no judicial stay and no extension of time. Experience
has shown that the availability of this powerful remedy, which significantly assists
financing, has had the beneficial effect of restoring US airlines to profi table trading.
In contrast, Alternative B leaves it to the court to determine whether to order the
giving up of possession.
Every Contracting State except Mexico has so far opted for
Alternative A; however, Contracting States have an option to make no declaration
and continue to apply their domestic insolvency law