Corporate regulator sues Rex, directors over breaches
The corporate regulator has accused troubled regional airline Rex of misleading and deceptive conduct.
The Australian Securities and Investments Commission is taking the carrier to the NSW Supreme Court, after further alleging Rex contravened its continuous disclosure obligations.
The commission is pursuing former executive chair Lim Kim Hai over the disclosure breach, claiming Lim and board members John Sharp, Lincoln Pan and Siddharth Khotkar contravened their directors’ duties.
“Our case will allege serious governance failures at Rex,” commission chair John Longo said on Wednesday.
“Rex’s directors had a responsibility to take reasonable steps to ensure the company complied with the law and we will seek to hold them to account.
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“We will allege four of Rex’s directors breached their duties because they failed to take steps to ensure the market had accurate information about the company’s financial performance.”
The regulator is seeking declarations, pecuniary penalties and disqualification orders against Lim, Sharp, Pan and Khotkar.
Rex entered voluntary administration in July, with its businesses around $500 million in debt across the five groups in the organisation.
Nominally a regional carrier, the airline aggressively pushed to compete on key capital-city routes against industry heavyweights Qantas and Virgin in 2021.
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It has struggled financially since, reporting a bottom-line net loss of $3.2 million for the first half of the 2023/24 financial year.
Its expansion included competing on Sydney-to-Melbourne flights, one of the busiest routes in the world.
The consumer watchdog found average fares on city routes went up 13 per cent in the two months after Rex stopped those services.
Ernst & Young Australia was appointed administrator but is yet to find a buyer and at least 600 workers have been made redundant.
Rex was given a $80 million loan facility from the federal government to keep the vital regional carrier operating.
The airline scrapped all capital city flights when it entered administration. It has continued to service regional routes.
Formed in 2002, Rex is Australia’s largest independent regional airline and makes about 1050 flights a week on 45 routes.
