Structured Asset Finance in Ukraine
A lender takes a security interest over a Ukrainian-registered aircraft — but the pledge is not registered in the State Register of Encumbrances, making it unenforceable against third parties. An IDERA is filed with the Ukrainian aviation authority — but the deregistration request is rejected because the authority’s internal procedures do not align with the Cape Town Convention protocol.
These are the standard failure points in asset-based financing transactions involving Ukrainian assets. The structures are designed under foreign law — but must be implemented and enforced within the Ukrainian legal system. We act as Ukrainian Local Counsel, ensuring that asset-based financing structures are properly adapted to Ukrainian law. This work forms part of our Aviation & Asset Finance practice and connects to our investment framework (→ Investing in Ukraine).
What makes asset finance different in Ukraine
Asset-based financing in Ukraine involves specific legal elements that differ from common law and continental European practice:
- Pledge registration is constitutive — pledge over movables (aircraft, engines, equipment) must be registered in the State Register of Encumbrances to be enforceable against third parties
- Cape Town Convention applies — with limitations — Ukraine ratified the Convention and Aircraft Protocol, but implementation gaps remain in IDERA procedures and remedies on default
- Mortgage requires notarization — mortgages on land, buildings, and infrastructure must be notarially certified and registered. Without notarization, the mortgage is void
- Step-in rights require careful structuring — Ukrainian law does not automatically recognize lender step-in. Must be structured through assignment, consent provisions, and sometimes court orders
- No floating charge — security over future receivables must be structured through assignment mechanisms with specific Ukrainian law requirements
This practice covers financing of specific assets — aircraft, engines, equipment, and infrastructure objects. For capital-raising structures involving bonds, multi-investor SPVs, or project finance models → Capital Markets & Structured Finance.
Scope of services
Aircraft & engine financing
- Pledge over aircraft and engines — State Register of Encumbrances
- Cape Town Convention — IDERA filing, international interest registration
- Aircraft mortgage — aviation registry + encumbrance registry coordination
- Operating and finance lease — Ukrainian law enforceability
- Coordination with aircraft leasing (→ Leasing & Acquisition)
Equipment & industrial asset financing
- Pledge over movable equipment — registration, priority, enforcement
- Security over inventory and production assets — limitations & alternatives
- Assignment of receivables from equipment operations
- Integration with project operational agreements
Security package design & implementation
- Pledge — State Register of Encumbrances registration & priority
- Mortgage — notarization, State Register of Real Property Rights
- Assignment of receivables — current and future
- Share pledge — LLC participatory interests, JSC shares
- Account pledge and security agent structures
Step-in rights & control mechanisms
- Contractual step-in — consent clauses, pre-agreed assignment
- Direct agreements — lender, borrower, operator
- Power of attorney for emergency control transfer
- Regulatory coordination (aviation authority, sector regulators)
- Court-based and contractual enforcement paths
Cross-border financing integration
- Coordination with foreign law security documentation
- Parallel security — Ukrainian law + foreign law layers
- Intercreditor agreement — priority & subordination analysis
- Enforcement coordination across jurisdictions
- Investment structure alignment (→ Structuring)
Enforcement & recovery
- Out-of-court pledge enforcement under Ukrainian law
- Foreclosure on mortgaged property — court & notarial paths
- Aircraft repossession — Cape Town Convention remedies
- Asset preservation — interim measures, freezes
- Dispute resolution coordination (→ Disputes)
Work algorithm
We support the Ukrainian law layer of asset financing transactions — from security design through registration, enforcement preparedness, and ongoing monitoring.
Step 1 — Asset and structure analysis. We assess the asset, its legal status under Ukrainian law, and the proposed financing structure. We identify elements requiring Ukrainian law adaptation.
Step 2 — Security package design. We design the Ukrainian law security package — selecting instruments (pledge, mortgage, assignment, share pledge) and mapping registration requirements.
Step 3 — Cape Town Convention analysis (for aircraft). We assess Cape Town applicability, IDERA requirements, and interaction between international interests and Ukrainian domestic security.
Step 4 — Documentation review. We review foreign law financing documentation from a Ukrainian law perspective — identifying provisions requiring adaptation or parallel Ukrainian documentation.
Step 5 — Registration and implementation. We execute security registrations — State Register of Encumbrances, State Register of Real Property Rights, aviation registry — and confirm priority positions.
Step 6 — Enforcement preparedness. We prepare enforcement scenarios — identifying available remedies (out-of-court, court-based, Cape Town) and pre-positioning for enforcement.
Step 7 — Ongoing monitoring. We monitor the security package throughout the financing lifecycle — registration renewals, regulatory changes, and restructuring support.
Who we work with
We act as Ukrainian Local Counsel for the security and enforcement layer of asset financing transactions.
Our clients include:
- International banks and financial institutions providing asset-backed lending
- Aircraft lessors and operators financing fleet through secured structures
- International law firms needing Ukrainian Local Counsel for security package implementation
- Infrastructure project sponsors requiring asset-based financing with Ukrainian collateral
Typical situations we handle:
- Aircraft lessor financing Ukrainian-registered fleet — pledge, IDERA, Cape Town, step-in rights
- International bank providing equipment financing — pledge over industrial assets, receivables assignment
- International law firm needs Ukrainian law legal opinion on security package enforceability
- Infrastructure investor structuring financing backed by Ukrainian real property — mortgage, receivables
- Restructuring of existing financing — security renegotiation, priority adjustments, enforcement prep
Key experts
Doctor of Laws — International aviation law, Cape Town Convention, cross-border financing, asset-based security
Doctor of Laws — International commercial arbitration, enforcement of security interests, cross-border disputes
PhD — Regulatory compliance, asset registration, aviation authority coordination, security implementation
FAQ: Structured Asset Finance in Ukraine
What security instruments are available for asset financing in Ukraine?
The main instruments are: pledge over movable assets (aircraft, engines, equipment — registered in the State Register of Encumbrances), mortgage over real property (notarized, registered in State Register of Real Property Rights), assignment of receivables (current and future), share pledge (LLC participatory interests, JSC shares), and account pledge. There is no floating charge under Ukrainian law — each asset requires a specific instrument.
Does the Cape Town Convention apply to aircraft financing in Ukraine?
Yes. Ukraine ratified the Convention and Aircraft Protocol. International interests can be registered on the International Registry. IDERAs can be filed with the Ukrainian aviation authority. However, implementation gaps remain — particularly regarding deregistration procedures and remedies on default.
How is a pledge over equipment registered and enforced?
Pledges over movable assets are registered in the State Register of Encumbrances on Movable Property. Registration establishes priority — an unregistered pledge is valid between parties but not against third parties. Enforcement can be out-of-court (if agreed in the pledge agreement) or through court proceedings.
Can a lender step into an operator's position in Ukraine?
Not automatically. Ukrainian law does not recognize automatic step-in rights. Step-in must be structured through: contractual consent provisions, pre-agreed assignment structures, direct agreements between lender and operator, and sometimes power of attorney arrangements.
How does asset finance differ from capital markets financing?
Asset finance focuses on specific assets as primary collateral. Capital markets financing focuses on raising capital from multiple investors through bonds, project finance SPVs, and waterfall structures. For capital-raising models → Capital Markets & Structured Finance.
What is the typical timeline for implementing a security package?
Pledge registration: 1–3 business days. Mortgage notarization and registration: 3–7 business days. IDERA filing: 5–15 business days. Full security package for a complex transaction: 2–4 weeks, assuming all underlying documents are in place.
Related practices
Ready to structure your asset financing?
We will ensure that your security package is properly implemented and enforceable under Ukrainian law.
