Rex owes money to 4450 creditors on top of customers whose flights were cancelled
The Federal Court has heard Rex owes money to 4450 creditors and that figure does not include the 185,000 customers whose flights have been cancelled.
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Broke carrier Rex owes money to 4450 creditors, including more than 1000 employees, after descending into administration on July 30.
In a brief Federal Court hearing to lay the groundwork for the first creditors’ meeting on Friday, Daniel Krochmalik for administrator EY said the number of creditors was expected to increase as the process unfolded.
As well as airports, governments and the Australian Taxation Office, Rex owed money to principal investor PAG Capital which was continuing to fund regional operations.
Although some of the debts were relatively small, as little as $275, in the case of major east coast airports Rex owed more than $12m, and for PAG the sum was as large as $150m.
The court heard as many as 185,000 customers could also be creditors, due to the cancellation of hundreds of flights operated by the airline’s now grounded Boeing 737 fleet.
Rex launched new Melbourne-Perth flights in late June, at a time when the airline was already in talks with EY about its financial position.
Although Virgin Australia had struck a deal with Rex to carry affected customers free of charge, Mr Krochmalik said it was unknown how many people had taken up this offer.
Virgin Australia revealed as of Tuesday, 42,000 Rex customers had been rebooked.
The extent of Rex’s debts was not revealed in court but it was believed to be significant – and worse than originally thought.
As well as issuing orders for the creditors’ meeting to be conducted virtually on Friday, Justice David Yates ordered an “extraordinary general meeting” sought by former executive chairman Lim Kim Hai be delayed until the administration was sorted.
Just two weeks before administrators were appointed, Mr Lim sought to meet with shareholders to vote on a number of resolutions, including the removal of four directors.
John Sharp, Jim David, Ron Bartsch and Lee Thian Soo were understood to have voted Mr Lim out of the role of executive chairman due to concerns over corporate governance.
It was possible Mr Lim would never get the chance to exact his revenge, as the administration is likely to result in a sale of Rex, or its liquidation.
Rex was established as Regional Express in 2002, operating flights to rural and outback centres using 34-seat Saab 340s.
During the pandemic when Virgin Australia entered administration, Rex made the decision to move into major city routes using Boeing 737-800s, including several previously leased by Virgin.
The larger airline is taking back at least three 737-800s to bolster its own fleet, which has been affected by the slowdown in Boeing’s production of new Max 8s.
Virgin Australia chief executive Jayne Hrdlicka has ruled out taking over Rex’s regional operations, saying the airline was determined to “stick to its knitting” and maintain a one-type fleet.
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