An 11th-hour bid to oust the directors of struggling carrier Rex will be sidelined ahead of a vote by tens of thousands of creditors to decide whether to resurrect or liquidate the company.
Administrators were appointed to five companies in the Rex group on July 30, with the regional carrier grounding its Boeing 737s on routes between major metropolitan centres.
Regional flights have continued while a buyer or financial lifeline is sought for the airline.
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Barrister Daniel Krochmalik, representing EY administrators, told a Federal Court hearing on Tuesday that Rex had 4450 creditors, including its principal secured creditor Hong Kong-based investment firm PAGAC Regulus Holding (PAG).
“That number is likely to increase in the course of the administration,” he said.
There were 1057 employees who were awaiting pay, as well as staff who had lost their jobs following the administration who were seeking their entitlements, the court was told.
Between 54,000 and 185,000 passengers whose flights were cancelled also needed refunds.
Virgin Airlines offered to transfer affected customers to its own flights free of charge, but the number of people who had taken up this offer was unknown, Mr Krochmalik said.
Justice David Yates made orders allowing for the first meeting of creditors to be held virtually on Friday.
He was told Rex director and major shareholder Lim Kim Hai had issued a notice to effectively oust the airline’s other directors around two weeks before the company entered administration.
Lim, who is also PAG’s executive chair, has requested a meeting to elect a new board be held despite the firm’s ongoing financial struggles.
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But that meeting will be postponed until after a second scheduled creditors’ meeting, where a vote will decide whether to return the Rex companies to the existing board, place them under a deed of company arrangement or liquidate them.
PAG has agreed to fund the administrators but details of this agreement are confidential.
At Friday’s first meeting, creditors will be asked to vote on a committee of inspection made up of representative creditors, who will assist in the administration process.
Rex emerged from the collapse of Ansett in 2002 and offers passenger, freight and chartered flight services as well as flight training.
It has struggled with profitability since aggressively expanding in 2021 to compete on capital-city routes against dominant operators Qantas and Virgin Australia.
In February, the airline reported a net loss of $3.2 million for the first half of the 2023/24 financial year as it burned through money spent on its major-city services.
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