Rex’s board spill should be delayed, administrators tell court

Lim, who is not only a founding shareholder of Rex but holds the biggest stake at 16.9 per cent, sought shareholder approval to remove his former deputy, ex-transport minister John Sharp, along with directors Kim Davis, Ron Bartsch and Lee Thian Soo.

Lim had been executive chairman for 21 years until Sharp allegedly had him suddenly ousted from the top job on 5 June.

The news comes as The Australian Financial Review has published documents and emails it says are from key Rex players including Lim and Sharp, revealing what it describes as an “all-out war at the company’s highest levels” between the two, including Sharp allegedly saying Lim “lives in a world where he is God”.

The notice of the meeting was made under the Corporations Act on 18 July and Lim, through his solicitors at Baker McKenzie, told the administrators he intended to move forward with the plan.

Under the act, the directors are obliged to call the meeting within 21 days, but by the time the deadline had rolled around, the administrators were on the verge of being appointed.

They now seek an order for the court to extend the period for calling the meeting until 20 business days after the second meeting of creditors and extend the holding of the meeting until 28 business days later.

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Counsel for the administrators, Daniel Krochmalik, said the general meeting would incur “substantial” costs and was not currently in the interests of Rex Airlines’ creditors, including its customers.

“The submission we advance is, in practical terms, creditors are the ones that determine the future of the company and the creditor’s interests are paramount in the administration process,” he said.

Krochmalik added that calling the meeting now while the directors hold no power and the administration process is ongoing would be pointless.

There was also the particular “curiosity” that Lim was present at the meeting of directors when the decision to enter voluntary administration was made. Krochmalik said there was no evidence to suggest Lim had voted against the administrator’s appointments.

Lim was also of the view the company may be able to emerge without a deed of company arrangements or liquidation.

Krochmalik said after discussions with his solicitors, Lim appeared to accept the administrator’s request that the meeting be postponed given he did not make a formal objection or request to appear in court.

In earlier submissions, Krochmalik said the administration process would be “large and complex” and they were still looking through the “very large number of contingent creditors” – that is, customers whose flights between major metropolitan cities were cancelled.

These customers could bring a claim against Rex as a result, provided they have not rebooked a flight through Virgin free of charge, Krochmalik told the court.

It does not include customers on the continuing regional flights.

Krochmalik said during the investigation, the administrators found about 180,000 text messages sent about cancelled flights.

However, this does not account for passengers who have multiple flights booked and may have received more than one text.

Going off the email addresses of Rex’s customers, the administrators said it was more likely there were 54,000 customers affected.

“On either view of things, it’s a very large number,” Krochmalik said.

“Each of these matters … the nature of the business carrying out and the fluidity of the position has made this a complex administration, or series of administrations.”

In addition to an order to push back Lim’s deadlines, the administrators have also asked the court for orders relating to the contacting of customers and a creditor meeting at the end of the week.

Justice David Yates will make his orders shortly.