iscover
Rex’s directors sought a $10 million cash injection from its financiers less than two months after telling the ASX it would post a profit for the 2023 financial year, ASIC has alleged.
In NSW Supreme Court documents seen by The Sydney Morning Herald, the corporate and financial regulator has claimed that Rex’s then executive chairman, Lim Kim Hai, emailed fellow directors saying the airline had lost $7.2 million before tax in February 2023.
This content is available exclusively to Australian Aviation members.
A monthly membership is only $5.99 or save with our annual plans.
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Unlimited access to all Australian Aviation digital content
- Access to the Australian Aviation app
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Access to our Behind the Lens photo galleries and other exclusive content
- Daily news updates via our email bulletin
- Unlimited access to all Australian Aviation digital content
- Access to the Australian Aviation app
- Australian Aviation quarterly print & digital magazines
- Access to In Focus reports every month on our website
- Access to our Behind the Lens photo galleries and other exclusive content
- Daily news updates via our email bulletin
This was despite the airline telling the ASX on 28 February that year it was “optimistic the Group would have positive operating profits for the full year 2023 barring any further external shocks”.
It would go on to post a $31.7 million loss for that year, with ASIC now suing the company and four of its directors – Lim, as well as John Sharp, Lincoln Pan and Siddharth Khotkar – alleging “misleading and deceptive conduct”. Sharp, Pan and Khotkar have all told the Herald they will be defending the allegations; Rex administrator EY Australia has previously indicated it would not comment due to the matter being before the courts.
“On 21 March 2023, Lim received the year-to-date and monthly profit-and-loss figures for the Rex Group for February 2023, and Rex was thereby aware that the Rex Group had incurred an operating loss of approximately $46.2 million,” ASIC wrote.
“On 14 April 2023, Lim made a request by email to Pan and Khotkar (copying Sharp) requesting $10 million in funding from PAG, describing the company’s cash reserves as ‘critically low’, domestic sales as ‘disappointingly and bewilderingly bad’, the February results as having ‘crashed’ and a lack of recovery in March.”
ASIC was last month granted leave to bring proceedings against the carrier, which is currently in voluntary administration.
It will seek a declaration of contravention against Rex, but no financial penalties for the company; however, the watchdog is seeking financial penalties, as well as declarations and disqualification orders, against the four directors.
“Our case will allege serious governance failures at Rex. 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,” ASIC chair Joe Longo said in December.
“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.”
YSSYRamper
says:What a sad state of affairs. How can the senior management team not know the company