Using special purpose vehicles in aviation finance—subsidiary companies, orphan trusts and limited partnerships

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Produced in partnership with Norton Rose Fulbright
Practice notes

Using special purpose vehicles in aviation finance—subsidiary companies, orphan trusts and limited partnerships

Copyright © 2025 LexisNexis

Produced in partnership with Norton Rose Fulbright

Practice notes
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The use of special purpose vehicle structures is very common in aviation finance. They provide various advantages for lenders such as tax benefits and providing a bankruptcy remote vehicle for the financing.

Types of special purpose vehicle and orphan trust

A special purpose vehicle (SPV) (also known as a single purpose company (SPC)) is a legal entity set up for a limited purpose; in the case of aviation finance this is usually to own an aircraft for a specific transaction. There are many types of SPVs used in aviation finance, the main ones being:

  1. •

    subsidiary companies

  2. •

    orphan trusts, and

  3. •

    limited partnerships

Each of these types is considered below. The type of special purpose vehicle which is used will vary on a transaction by transaction basis.

Subsidiary companies

Subsidiary companies are usually limited liability companies incorporated in a tax-friendly jurisdiction. Depending on the structure, they can be:

  1. •

    owned by one of the banks financing the transaction (and in a syndicated facility, this is usually the facility agent)

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Jurisdiction(s):
United Kingdom
Key definition:
Special purpose vehicle definition
What does Special purpose vehicle mean?

A legal structure sometimes also used in contingent asset funding strategies under which both the sponsor and the fund achieve a specific objective, eg the employer places assets into an SPV which are loaned back to the employer on specified terms, the returns being shared between the fund and the sponsor.

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