Aircraft repossessions are not as wild or adventurous as portrayed on television, according to Ken Hill, president and CEO of Business Aircraft Sales Corp. Speaking in a recent webinar sponsored by VREF, Hill—who has conducted hundreds if not thousands of aircraft repossessions during his career—described most of the TV portrayals, where repo men break into hangars under cover of night and spirit away aircraft, as fiction.
“I’ve watched some of those shows for about 10 or 15 minutes and I’ve seen them break the law about 10 times,” he said. “I want to make sure that what I do is legal…and within the context of state law that I’m in, and I want to make sure that the liability of the bank is protected 100 percent.”
Hill noted that once he receives the necessary paperwork from the lender, he notifies the airport and the aircraft owner of his pending arrival and intended operation, which is conducted during normal business hours. He recalled how during one of his latest jobs, he had to educate the airport officials about how the process worked. “If you just wander on the airport without permission, nowadays they’ll [arrest you],” he told the audience. “You also always want to avoid airport police, because once they get involved there’s a lot of other questions that have to be answered.”
That’s not to say all of the repossessions have gone smoothly, and Hill recalls maybe a dozen where things have gone badly. This includes one in Florida where his leg was broken by the 2x4 wielding owner of an FBO/flight school, and another in Nebraska where the aircraft owner attempted to pull a gun on Hill but accidentally shot himself in the foot. Hill ended up driving him to the hospital.
Once the aircraft is repossessed and secured, that brings another flurry of questions, said VREF CEO Ken Dufour. Will it need to be re-registered? Will the aircraft be hangared? Who will handle the valuation and perform any needed maintenance? What sort of insurance will it need? Will it be stored or actively marketed? If it will be operated for demonstration flights, who will operate it?
Dufour told the audience that unfortunately many lenders do not perform adequate monitoring of the aircraft while it is under the control of their customers. Most contracts clearly state that if the operational status of the aircraft changes, the customer is required to notify the lender—but few actually do. He cited one instance where an aircraft was found to be in Afghanistan performing support services to the U.S. Army, clearly in violation of its described use.
As a result, once the aircraft is repossessed or go off-lease, lenders often have little idea what they will be receiving, including in matters such as where the engines are in the overhaul timeframe. One indication of a pending repossession is maintenance neglect, and aircraft might be recovered only to find that they are thousands of dollars in arrears on maintenance programs.
That also brings into consideration the condition of the aircraft’s maintenance logs and records. If not available, it will be a costly and time-consuming endeavor to recreate them if that is even possible, and incomplete documentation will certainly affect the value of the aircraft, Dufour said.
