This basic rule of statutory construction has been applied to interpret the very statute at issue here, § 1110. In re Air Vermont, 761 F.2d 130, 134 (2d Cir. 1985) ("[where] the statute is unambiguous on its face . . . the statute's literal meaning must be applied" unless "there is something to make plain the intent of Congress that the letter of the statute is not to prevail"). In Air Vermont, the Second Circuit, noting that "the statute's literal meaning must be applied," reversed an order of the bankruptcy court which read into § 1110 an additional, unstated statutory requirement that a conditional seller perfect its security interest by filing its contract with the Federal Aviation Administration.
Congress designed the extraordinary relief provided in § 1110 for certain financers of aircraft "in order to encourage investment in new equipment for air carriers." In re Air Vermont, Inc., 761 F.2d 130, 132 (2d Cir. 1985) (citing H.R. Rep. No. 595, 95th Cong., 1st Sess. 238-39 (1977), 1978 U.S. Code Cong. Admin.News 1978, pp. 5787, 5963, 6198); see also, Seidle v. GATX Leasing Corp., 778 F.2d 659, 662 (11th Cir. 1985). "In granting this protection, Congress excluded general creditors secured by transportation equipment."
As we have said, Congress in § 1110(a) “intend[ed] to extend extraordinary protection to financiers of aircraft,” providing them heightened ability to protect their collateral in bankruptcy proceedings, “in order to encourage investment in new equipment for air carriers.” In re Air Vt., Inc., 761 F.2d 130, 132 (2d Cir.1985); see also In re Trans World Airlines, 145 F.3d 124, 137 (3d Cir.1998)(“ Section 1110 was designed in part to increase availability of low-interest capital to the transportation industry.”). At the same time, pursuant to § 1110(a)(2), a debtor like American may secure the protection of the automatic stay (preventing, inter alia, repossession of its equipment) if within 60 days of a bankruptcy filing it: (1) agrees to perform “all obligations of the debtor” pursuant to its agreement with the secured creditor; and (2) it cures any default not “of a kind specified in section 365(b)(2)” within a defined period.
That trustee “may avoid an unperfected security interest.” Cal. Chieftan v. Air Vt., Inc. (In re Air Vt., Inc.), 761 F.2d 130, 131 (2d Cir.1985). As an example, under the New York Uniform Commercial Code (the “UCC”), a creditor could obtain a security interest in a consigned item senior to that of a consignee who does not file a financing statement.
That trustee "may avoid an unperfected security interest." Cal. Chieftan v. Air Vt., Inc. (In re Air Vt, Inc.), 761 F.2d 130, 131 (2d Cir. 1985). As an example, under the New York Uniform Commercial Code (the "UCC"), a creditor could obtain a security interest in a consigned item senior to that of a consignee who does not file a financing statement.
17. In re Air Vermont, Inc., 761 F.2d 130 (2d Cir. 1985); 18.
To the extent a party is a true lessor and otherwise qualifies under the statute, it is entitled to the "extraordinary protection' of § 1110." 125 B.R. at 374 (quoting In re Air Vermont, Inc., 761 F.2d 130, 132 (2d Cir. 1985)). "If the lease is a true lease, rather than a disguised loan, and meets all other elements of the statute — e.g. qualified equipment, qualified air carrier, repossession clause in lease — the lessor is protected by § 1110."
The Second Circuit has held that once § 1110's explicit conditions are met, a court may not impose further conditions on a creditor's exercise of the rights which the statute provides. In re Air Vermont, Inc., 761 F.2d 130, 134 (2d Cir. 1985). Proceedings Below
The Court recognizes the extraordinary protection that Congress extendedto aircraft financers through Section 1110, a point emphasized by U.S. Bank. See Cal. Chieftan v. Air Vt., Inc. (In re Air Vt.), 761 F.2d 130, 132 (2d Cir.1985) (observing that under Section 1110 Congress “intend[ed] to extend extraordinary protection to financiers of aircraft in order to encourage investment in new equipment for air carriers, especially small ones ... Congress intended to encourage this investment, by providing that the power of creditors to repossess aircraft from a defaulting debtor not be restricted in any way by the usual protections afforded debtors-in-possession or trustees by the Bankruptcy Code.”) (internal citations omitted). In contrast to other types of agreements, Section 1110 sets a higher hurdle for those debtors wanting to take advantage of the automatic stay in the context of an aircraft financing by automatically requiring the debtors, among other things, to cure any defaults in contract payment. U.S. Bank continues to benefit from this requirement, as the debtor has yet to miss a regularly scheduled payment of principal or interest. U.S. Bank has continued to accept these payments, which it would not otherw
]" 11 U.S.C. § 1110(a) (emphasis added). St. Clair relies on California Chieftan v. Air Vermont, Inc. (In re Air Vermont, Inc.), 761 F.2d 130 (2nd Cir. 1985) to support its contention that it is entitled to possession of the sale proceeds under 11 U.S.C. § 1110. In Air Vermont, the court held that an unperfected lien on aircraft parts was protected from avoidance under Section 544 under the express language of Section 1110.