GKG Law Wins Multimillion-Dollar Judgment in Breach of Aircraft Lease

News

GKG Law successfully represented an aircraft owner in a recent case involving the lease of a Gulfstream V (“the Aircraft”). The GKG Law Litigation team, led by Principal Brendan Collins, filed suit in the Southern District of New York alleging breach of the parties’ lease agreement based upon the lessee’s failure to timely pay rent and engine reserve payments, and failure to comply with ongoing maintenance obligations under the lease. After initially recovering possession of the Aircraft on behalf of the Owner, GKG filed for summary judgment seeking damages arising from the breach of the lease agreement, including rent and maintenance obligations for the life of the lease (continuing after the owner’s recovery of the Aircraft). In an Opinion and Order dated July 24, 2020, the Court entered summary judgment on behalf of the owner and subsequently entered a judgment on its behalf for approximately $3 million. In so doing, the Court held that the lease provision obligations were enforceable regardless of any defective performance on the part of the lessor, that is, rent and related obligations remained in force come “hell or high water.”

There are several key takeaways worth noting from the Court’s ruling: The lawsuit highlights the need for aggressive action to protect an aircraft owner’s rights under a lease agreement. It also emphasizes the importance of carefully drafted aircraft lease terms, including the need for a “hell or high water” clause, which ensures that an aircraft owner can recover its aircraft in the event of a breach and can continue to enforce rent and other payment obligations post-aircraft recovery. Finally, the case underlines the importance of an acceleration clause in the event of a breach, to enable the owner to immediately collect rent for the remainder of the term of the lease rather than requiring periodic collection actions for unpaid rent.

GKG Law’s Business Aviation team is skilled in creating comprehensive purchase and sale documents that clearly define the roles of each party to the transaction and ensure that the documents adequately clarify those roles. The team has handled thousands of aircraft purchase and sale transactions, and has developed an esteemed reputation for successfully representing clients in cases where any such claims arise. 

Please contact us if you would like to discuss these issues further. For questions specifically involving the purchase, sale or lease of an aircraft, contact Keith Swirsky at (202) 342-5251 or kswirsky@gkglaw.com. For questions involving any disputes that arise amidst these kinds of transactions, contact Brendan Collins at (202) 342-6793 or bcollins@gkglaw.com.

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