A Message from David G. Mayer:

In an extraordinary, surprising, and disruptive action, the Federal Aviation Administration (FAA) has notified Southern Aircraft Consultancy Inc. (SACI) that all its aircraft registration certificates (estimated at 800 aircraft) are invalid because the company violated U.S. citizenship requirements when it submitted the registration applications. The importance of this situation is indisputable. If you or a client is affected by the FAA action, read on for some action steps you may consider immediately and read a brief explanation of the FAA action. The SACI team is making immediate, intense efforts to resolve this issue.

 PLEASE TAKE NOTICE that you should take the appropriate action steps immediately if you have used a SACI trust that may include the following:

• For owners and lessees, consider consulting or calling aviation or FAA counsel to determine whether you can operate or even relocate your aircraft, given the FAA grounding.
• For owners and lessees, consider contacting your insurance carrier to adjust your insurance for the grounding (and to retain coverage).
• For lenders and lessors, consider reviewing your documentation to determine whether your collateral or aircraft ownership has terminated or must be adjusted due to these circumstances and whether a default or an event of default has occurred under your financing/leasing documents.
• For counsel, you may need to alert your affected clients to these circumstances.
• For borrowers and lessees, consider reviewing your documentation on whether your aircraft ownership or lease is affected and whether a default or an event of default has occurred under your financing/leasing documents.
• For aviation insurance agencies, underwriters, and aircraft brokers, consider reaching out to your clients/insureds to address coverage issues.

• For all parties and advisors, if you do not know the trust that may own or have any other interest in an aircraft, consider expanding or confirming the scope of your diligence on trustees and their owners.

The FAA instructed SACI to surrender all the certificates. SACI registered aircraft for U.S. citizens and foreign nationals using trust agreements. To register an aircraft using a trust agreement, the company/trustee must either be a U.S. citizen or a resident alien. The FAA found that SACI violated FAA regulations regarding U.S. citizenship requirements and must return registration certificates to the FAA within 21 days of notification.  

The invalid Certificates of Aircraft Registration have resulted in the immediate grounding of all aircraft registered to SACI. To operate legally, affected aircraft owners must reregister their aircraft either through another country’s aircraft registry or in the U.S. by submitting an Aircraft Registration Application to the FAA.

I would also encourage anyone buying an aircraft to read my latest blog, especially if you plan on using trusts, titled: AINsight: Why Buying a Bizjet Is Like No Other Deal.  

If you or your clients have any questions about an aircraft owner trust or aircraft affected by the FAA action, including having a grounded aircraft, please feel free to contact me: dmayer@shackelford.law.