Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) (No 5)
[2025] FCA 685
•24 June 2025
FEDERAL COURT OF AUSTRALIA
Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) (No 5) [2025] FCA 685
File number: NSD 1050 of 2024 Judgment of: STEWART J Date of judgment: 24 June 2025 Catchwords: CORPORATIONS – application for third extension of convening period for second meetings of creditors – application for limitation of administrators’ personal liability pursuant to s 447A of the Corporations Act 2001 (Cth) and directions under s 90-15 of the Insolvency Practice Schedule being Sch 2 to the Corporations Act in relation to Amended Commonwealth Loan Agreement – where further extension required to complete sale process – where successful sale process will bring the best result – where no opposition – application granted Legislation: Corporations Act 2001 (Cth) Pt 5.3A, ss 440D, 442C, 443A, 447A, 439A
Federal Court of Australia Act 1976 (Cth) ss 37AF(1)(b)(i), 37AG(1)(a)
Insolvency Practice Schedule 2016 (Cth), being Sch 2 to the Corporations Act s 90-15
Cases cited: Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) (No 2) [2024] FCA 968
Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) (No 3) [2024] FCA 1394
Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) (No 4) [2025] FCA 385
Jet Midwest, Inc. v Regional Express Holdings Ltd trading as Regional Express Airlines (Administrators Appointed) [2024] NSWSC 1343
Jet Midwest, Inc. v Regional Express Holdings Ltd trading as Regional Express Airlines (Administrators Appointed) [2025] NSWCA 101
Re Daisytek Australia Pty Ltd [2003] FCA 575; 45 ACSR 446
Silvia, in the matter of Austcorp Group Ltd (Administrators Appointed) [2009] FCA 636
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 25 Date of hearing: 24 June 2025 Counsel for the Plaintiffs: M A Izzo SC, D Krochmalik and B J S Smith Solicitor for the Plaintiffs: White & Case LLP Counsel for the Intervener: B K Koch Solicitor for the Intervener: Norton Rose Fulbright Australia ORDERS
NSD 1050 of 2024 IN THE MATTER OF REGIONAL EXPRESS HOLDINGS LIMITED ACN 099 547 270 (ADMINISTRATORS APPOINTED)
BETWEEN: SAMUEL FREEMAN, JUSTIN WALSH AND ADAM NIKITINS IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF REGIONAL EXPRESS HOLDINGS LIMITED (ACN 099 547 270) (ADMINISTRATORS APPOINTED) AND THE THIRD TO SIXTH PLAINTIFFS
First Plaintiff
REGIONAL EXPRESS HOLDINGS LIMITED (ACN 099 547 270) (ADMINISTRATORS APPOINTED)
Second Plaintiff
AIR PARTNERS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 065 221 356) (and others named in the Schedule)
Third Plaintiff
AND: COMMONWEALTH OF AUSTRALIA
Intervener
ORDER MADE BY:
STEWART J
DATE OF ORDER:
24 JUNE 2025
THE COURT ORDERS THAT:
Extension of Convening Period
1.Pursuant to s 447A of the Corporations Act 2001 (Cth) (Corporations Act), Pt 5.3A of the Corporations Act is to operate in relation to the second to sixth plaintiffs (Rex Companies) as if, notwithstanding the provisions in s 439A of the Corporations Act, the convening period of the Rex Companies is the period up to and including 5 December 2025.
2.Pursuant to s 447A of the Corporations Act, Pt 5.3A of the Corporations Act is to operate in relation to the Rex Companies such that, notwithstanding the provisions in s 439A(2) of the Corporations Act, the second meetings of the creditors of the Rex Companies required under section 439A of the Corporations Act may be convened and held at any time during, or within, five business days after the convening period as extended by order 1 above, provided that the first plaintiffs (Administrators) give notice of the meeting to creditors of each of the Rex Companies (including the persons or entities claiming to be creditors of the Companies) at least five business days before the meeting.
Amended Commonwealth Loan Agreement
3.Pursuant to s 90-15 of the Insolvency Practice Schedule 2016 (Cth), being Sch 2 to the Corporations Act, the Administrators are justified in entering into and performing (and causing the Rex Companies to enter into and perform) the Amended Commonwealth Loan Agreement (as defined in the non confidential affidavit of Samuel John Freeman affirmed on 19 June 2025).
4.Pursuant to s 447A(1) of the Corporations Act, Pt 5.3A of the Corporations Act is to operate in relation to the plaintiffs as if s 443A(1) of the Corporations Act provides that:
(a)any liabilities of the Administrators incurred with respect to any obligations arising out of, or in connection with, the Amended Commonwealth Loan Agreement including monies borrowed, interest incurred in respect of monies borrowed and borrowing costs) are in the nature of debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of the Rex Companies; and
(b)notwithstanding that the liabilities in subparagraph (a) are debts or liabilities incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of the Rex Companies, if the property and assets of the Rex Companies (where relevant) are insufficient to satisfy these debts and liabilities, such that the indemnity under s 443D of the Corporations Act is insufficient to meet any amount for which the Administrators may be liable, then the Administrators will not be personally liable to repay such debts or satisfy such liabilities to the extent of that insufficiency.
Suppression Order
5.Until the conclusion of the administration of the Rex Companies or further order of the Court, pursuant to ss 37AF(1)(b)(i) of the Federal Court of Australia Act 1976 (Cth), on the ground stated in section 37AG(1)(a), being that the order is necessary to prevent prejudice to the proper administration of justice:
(a)the confidential affidavit of Samuel John Freeman affirmed 19 June 2025 (Confidential Freeman Affidavit);
(b)Confidential Exhibit SJF-10 exhibited to the Confidential Freeman Affidavit;
(c)paragraphs 20 to 25 of the affidavit of Samuel John Freeman affirmed 23 June 2025 (Ninth Freeman Affidavit);
(d)Confidential Exhibit SJF-12 exhibited to the Ninth Freeman Affidavit;
(e)the unredacted form of the plaintiffs’ submissions dated 23 June 2025;
(f)paragraphs 12, 15, 16, 18, 21, 23, 24, 29, 31, 32-35, 38 and 40-42 of the affidavit of Marisa Janelle Purvis-Smith affirmed 19 June 2025; and
(g)Confidential Exhibit MPS-4,
be kept confidential and be prohibited from disclosure to any person other than to:
(h)a Judge of the Court and that Judge’s personal staff;
(i)the plaintiffs and their legal representatives; and
(j)the Commonwealth of Australia and its legal representatives.
Ancillary Orders
6.The Administrators take all reasonable steps to cause notice of the Court's orders to be given, within one (1) business day of the making of the orders, to the:
(a)creditors (including persons or entities claiming to be creditors) of the Rex Companies, in accordance with Order 4 of the orders made on 6 August 2024; and
(b)Australian Securities and Investments Commission.
7.Liberty be granted to any person demonstrating a sufficient interest to apply to vary or discharge any orders made above, on reasonable written notice being given to the plaintiffs and to the Court.
8.The plaintiffs’ costs of the application be treated as costs in the administrations of each of the Rex Companies, jointly and severally.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Delivered ex tempore; revised from transcript)STEWART J:
The three joint and several administrators of each of five companies in the Rex Group of companies and each of those companies seek, principally, a further extension of the time for convening the second meeting of creditors of each of the companies. They seek an extension for a period of approximately five months to 5 December 2025.
On 23 August 2024, Cheeseman J granted the first extension of the convening period to 25 November 2024: Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) (No 2) [2024] FCA 968. On 20 November 2024, Markovic J further extended the convening period to 30 June 2025: Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) (No 3) [2024] FCA 1394 (Rex Holdings No 3). Since then, on 17 April 2025, I made further orders in the administration in relation to various contracts entered into or proposed to be entered into by the administrators: Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) (No 4) [2025] FCA 385. These reasons for judgment assume familiarity with those previous reasons.
The administrators have adduced evidence which establishes that the administrators have given notice of the application to creditors of the Rex Companies, the Commonwealth and the Australian Securities and Investments Commission. No one has appeared to oppose the relief sought by them and the Commonwealth has appeared, with leave, to support the relief. The interest of the Commonwealth is that it has continued to fund the ongoing trading of the Regional Business during the administration and is the senior creditor of the Rex Companies. It also proposes to fund the operation of the Regional Business through the period of the extension, if granted, under an Amended Commonwealth Loan Agreement. The Committee of Inspection for the Rex Companies has been consulted by the administrators about the relief they seek, and no member of the Committee has expressed any objection to the proposed extension.
I am satisfied that throughout the period of the existing extension of the convening period the administrators have worked diligently in pursuance of what they describe as the Further Sale Process to find the best buyer for the Regional Business.
A combination of considerations leads me to be satisfied that the further extension of time sought by the administrators should be granted.
First, the Further Sale Process has successfully yielded a number of offers by prospective bidders for the purchase of the Regional Business for substantial consideration. However, the Further Sale Process has not been finally concluded because the offers to acquire the Regional Business require further negotiation and are not in a final form capable of acceptance. The result is that there is no prospect of a sale transaction being finalised by the end of the current convening period. If a further extension is not granted it is almost inevitable that the creditors will resolve to place the companies into liquidation which will result in the cessation of the Regional Business and sale of the companies’ assets in a piecemeal fashion.
Secondly, a further extension of the administration will maximise the prospect that the Regional Business will be able to be sold as a going concern and will continue in existence, which is the primary object of voluntary administration under Pt 5.3A of the Corporations Act 2001 (Cth). In that regard, the administrators have received a number of offers from sophisticated commercial parties that are substantial entities with relevant experience. Negotiations with those parties are continuing. The Commonwealth, which is the funder, secured creditor and guarantor of the employee entitlements (under the Federal Employee Guarantee Scheme), supports the extension and, as mentioned, will continue to fund the Regional Business until the end of the extension.
Thirdly, the extension of the convening period to enable completion of the Further Sale Process and the sale of the Regional Business as a going concern will maintain the employment of approximately 940 employees. In contrast, a liquidation at this stage would likely result in less than 10% of the employees enjoying continued employment to support a controlled closure of the Regional Business and all other employees losing their jobs.
Fourthly, the continuation of the Regional Business has broader societal benefits. The Regional Business performs functions which are very important to regional Australia and for which, in many cases, there would be no replacement if the Regional Business were to cease trading. Further, the Regional Business is either the sole or primary customer of many small and medium-sized businesses in the regional areas that its services. Those businesses exist in order to support the operations of the Rex Companies. The continuation of the administrations will also benefit many thousands of customers who have flight bookings. In that regard, there are currently more than 70,000 bookings by customers which will necessarily be cancelled if the Rex Companies are placed into liquidation at the second meeting of creditors.
Fifthly, the administrators, who possess relevant expertise and experience, hold the opinion that liquidation of the companies is not the most beneficial course of action. That is principally for the reasons that I have already expressed.
Sixthly, I am satisfied that unsecured creditors are not likely to be worse off if an extension is granted compared to if the companies go immediately into liquidation.
Seventhly, it is highly significant that the Commonwealth is not only supportive of the proposed extension of the convening period, but it will continue to fund the trading of the business.
Finally, there is the position of Jet Midwest Inc, a United States incorporated company that entered into an agreement in 2019 to sell four SAAB 340B aircraft, or the component engines and parts of those aircraft, to Rex Holdings and/or Rex Investment. Shortly prior to the commencement of the administrations, Jet Midwest brought a claim in proceedings in the Supreme Court of New South Wales to the effect that Rex Holdings had possession of Jet Midwest’s property (being the aircraft or component parts) without paying the purchase price owing to Jet Midwest in accordance with the agreement. Jet Midwest sought leave to lift the moratorium in s 440D of the Corporations Act and continue with its claim (initially styled as a claim for damages and then proposed to be amended to a claim for recovery of that property in specie). That application was dismissed at first instance: Jet Midwest, Inc. v Regional Express Holdings Ltd trading as Regional Express Airlines (Administrators Appointed) [2024] NSWSC 1343 per Stevenson J. Jet Midwest then brought an application for leave to appeal which was granted but the appeal was dismissed: Jet Midwest, Inc. v Regional Express Holdings Ltd trading as Regional Express Airlines (Administrators Appointed) [2025] NSWCA 101 per Ball JA, Mitchelmore and McHugh JJA agreeing. Jet Midwest has recently filed an application for special leave to appeal to the High Court which is pending.
The administrators accept that the Rex Companies cannot dispose of the property of Jet Midwest that is in the possession of the companies as part of any sale transaction without the consent of Jet Midwest or the leave of the Court pursuant to s 442C of the Corporations Act. The administrators therefore anticipate seeking such leave as part of the culmination of any sale process or any restructure through a deed of company arrangement, and that any such leave would involve Jet Midwest being compensated for the value of any property established to be owned by it.
I am satisfied that Jet Midwest will not be prejudiced by the further extension. That is principally because Jet Midwest is best placed to assess its own likely prejudice and it has not opposed the extension. It is obviously well lawyered-up and would be expected to bring forth any contention of prejudice if it had any. The administrators have advanced further submissions in relation to why Jet Midwest will not suffer prejudice, or any significant prejudice, if the extension is granted but I do not consider it necessary to consider those any further in the absence of any opposition from Jet Midwest.
The administrators have explained why a further extension of approximately five months is required. I am satisfied with their explanation. In brief, it is required in order to accommodate the remaining steps to complete the Further Sale Process and document any transaction that may result. In that regard, the needs of the bidders in finalising and negotiating the bids as well as the scale and complexity of the Regional Business explains and justifies that period of time.
Further, the administrators wish to be able to convene the second meetings at an earlier time than the latest available date to the extent that it is possible and desirable to do so, depending on the course of events with regard to finalisation of the Further Sale Process. They therefore seek an order in accordance with Re Daisytek Australia Pty Ltd [2003] FCA 575; 45 ACSR 446 at [18] per Lindgren J. That is desirable as it provides the administrators with flexibility as to the timing of the meetings: Silvia, in the matter of Austcorp Group Ltd (Administrators Appointed) [2009] FCA 636 at [18(f)] per Lindgren J.
Amended Commonwealth Loan Agreement
By prayer 3 of the interlocutory process, the administrators seek an order that they are justified in entering into and performing (and causing the Rex Companies to enter into and perform) the Amended Commonwealth Loan Agreement. The details of that agreement are confidential and in the best interests of the administration should not be disclosed, save to say that it will enable the extension of the administration in order to pursue the Further Sale Process.
In Rex Holdings No 3, Markovic J (at [78]) explained why a direction should be made that the administrators were justified in entering into, and causing the Rex Companies to enter into, the Commonwealth Finance and Security Agreements under which the extension then under consideration was made possible. Those reasons apply equally in respect of the Amended Commonwealth Loan Agreement.
Being satisfied that it is appropriate to extend the convening period, it follows that I should make orders that the administrators are justified in entering into and performing that agreement – without it, there could be no extension. The orders are necessary in order to access the relevant funding and so will further the objectives of Pt 5.3A for the benefit of creditors and other stakeholders.
By prayer 4 of the interlocutory process, the administrators seek an order limiting their liability under the Amended Commonwealth Loan Agreement. The relevant principles with respect to limitation of an administrator’s personal liability in these circumstances were summarised in Rex Holdings No 3 at [66]-[71]. For the same reasons as given by Markovic J in that case, I am satisfied that orders should be made limiting the personal liability of the administrators with respect to their obligations under the Amended Commonwealth Loan Agreement.
Suppression orders over confidential material
By prayer 5 of the interlocutory process, the administrators seek a suppression order under ss 37AF and 37AG of the Federal Court of Australia Act 1976 (Cth) with respect to certain confidential affidavits and exhibits. The Commonwealth also seeks orders in respect of similar evidence adduced by it.
I am satisfied that there is a need to suppress that material in order to prevent prejudice to the proper administration of justice. That approach is quite conventional in cases such as this for the reasons explained in the well-traversed authorities. In short, it is necessary to do so in order to preserve the integrity of the Further Sale Process.
Ancillary orders
The administrators also seek further ancillary orders that are quite standard in a case such as this. I am satisfied that they should be made. They include an order giving any party with a sufficient interest liberty to apply to vary any of the orders I make, including the suppression orders.
For those reasons I will make orders substantially in the form of the short minutes of order provided previously, with the addition of a few sub-paragraphs dealing with suppression orders over the Commonwealth’s confidential evidence.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart. Associate:
Dated: 24 June 2025
SCHEDULE OF PARTIES
NSD 1050 of 2024 Plaintiffs
Fourth Plaintiff:
REX INVESTMENT HOLDINGS PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 101 317 677)
Fifth Plaintiff:
REGIONAL EXPRESS PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 101 317 677)
Sixth Plaintiff:
REX AIRLINES PTY LTD (ADMINISTRATORS APPOINTED) (ACN 642 400 048)
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