Purchasing New Aircraft

[Guest Kevin the Penniless]

Hi. I'm thinking seriously about buying a new factory built aircraft. However, being a paranoid android I am scared that as soon as I hand over $20,000 deposit or whatever is required that company will suddenly go belly up due to the financial crisis. I'm wondering if anybody out there has purchased new and done the ground work already. Any advice greatly appreciated.

 

 

[facthunter]

Concern.

 

I feel that your concern is realistic. Perhaps setting the payment in a 'trust" may satisfy the vendor and yourself. Nev.

 

 

[Guest Orion]

Hi Kev

 

I'm going through the process at the moment.

 

It is always a risk when you pay a deposit as in the event that a company goes under prior to delivery then you rank as what is refered to as an unsecured creditor so basically you are at the end of the que to get payment in the event of a liquidation. Only shareholders rank lower than an unsecured creditor. [ this is the accountant in me talking].

 

The suggestion about funds held in trust is valid but difficult in practice to enforce, and depending upon the purchase contract may not in fact protect you in a liquidation. Liquidators tend to take first and then require you to prove a claim.

 

Most manufacturers require a deposit and then progress payments during the build so they have cashflow to complete the job.

 

So how do you protect yourself ? not easy there is no subsitute for research and building a relationship with the manufacturer but thats no gaurentee. The internet makes research a bit easier these days but its no gaurentee, researching companies based overseas particularly ones based in the old Soviet block is going to be difficult as they don't generally have the same history of corporate governance that western nations have had.

 

But then again given what we have seen lately the behaviour of some [ mostly large conglomerates and institutions] western business leaves a lot to be desired.

 

Cheers

 

Kent

 

 

[David F]

I would be really carefull and negotiate around that. In the present situation there is bound to be some one who has a new or near new model that wishes to sell it. I dont mind looking at aircraft buying it and then taking it away but to put 20 g down and wait six months would lead to many sleepless nights.Good luck .

 

David F