Federal Court of Australia

Freeman, in the matter of Rex Airlines Pty Ltd (in liq) (No 8) [2026] FCA 753

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 9.08 of the Federal Court Rules 2011 (Cth):

(a)    The second to fifth plaintiffs be removed as parties to the proceeding;

(b)    Justin Walsh be removed as a party to the proceeding; and

(c)    The first plaintiffs be renamed as Samuel Freeman and Adam Nikitins in their capacity as joint and several liquidators of Rex Airlines Pty Ltd (the Liquidators).

2.    Pursuant to s 477(2B) of the Corporations Act 2001 (Cth), approval be granted to the Liquidators to enter into and perform (and cause Rex Airlines Pty Ltd to enter into and perform) the Consignment Agreement as amended by the Further Side Letter (as those terms are defined in the affidavit of Samuel John Freeman affirmed 3 June 2026).

3.    The Liquidators take all reasonable steps to cause notice of these orders to be given, within one (1) business day hereof, to the counterparty to the Consignment Agreement as well as creditors (including persons or entities claiming to be creditors) of Rex Airlines Pty Ltd, by the following methods:

(a)    where the Liquidators have an email address for a creditor (including persons or entities claiming to be creditors), by notifying each such creditor of these orders via email;

(b)    where the Liquidators do not have an email address for a creditor (or have received notification of non-delivery of a notice sent by email in accordance with order 3(a) above), but the Liquidators have a postal address for that creditor, by posting these orders to each such creditor; and

(c)    by placing a scanned, sealed copy of these orders on the creditor portal maintained by the Liquidators at https://ey.creditors.accountants/I/Job/Details/4925.

4.    Liberty be granted to any person demonstrating a sufficient interest to apply to vary or discharge order 2 made above, on at least two (2) business days’ written notice being given to the plaintiffs and to the Court.

5.    The plaintiffs’ costs of and incidental to the relief sought in this application be treated as costs and expenses in the liquidation of Rex Airlines Pty Ltd.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Delivered ex tempore; revised from transcript)

STEWART J:

1    The first plaintiffs are Samuel Freeman, Justin Walsh and Adam Nikitins in their capacity as joint and several liquidators of Rex Airlines Pty Ltd.

2    Rex Airlines was placed into liquidation by a resolution of creditors on 11 November 2025. The creditors also resolved that a deed of company arrangement, or DOCA, be entered into by eight other companies in the same group of companies with Messrs Freeman, Walsh and Nikitins as the deed administrators. Those companies include the second to fifth plaintiffs to the proceeding, namely Regional Express Holdings Ltd (Rex Holdings), Air Partners Pty Ltd, Rex Investment Holdings Pty Ltd and Regional Express Pty Ltd.

3    On 17 December 2025, Mr Walsh retired as a liquidator of Rex Airlines. Messrs Freeman and Nikitins consequently seek an order that Mr Walsh be removed as a party to the proceeding. There is no reason why such an order should not be made.

4    On 14 November 2025, the DOCA was executed by the respective parties and Messrs Freeman, Walsh and Nikitins were appointed as deed administrators of the DOCA companies.

5    On 11 December 2025, I made orders granting leave to the deed administrators under s 444GA of the Corporations Act 2001 (Cth) to, amongst other things, transfer all the existing shares in the capital of Rex Holdings from the members of Rex Holdings to Air T Rex Acquisition Inc (Air T), in accordance with the terms of the DOCA. See Freeman, in the matter of Regional Express Holdings Ltd (subject to deed of company arrangement) (No 7) [2025] FCA 1598.

6    Pursuant to the s 444GA orders, the DOCA was effectuated on 18 December 2025 and ASIC forms 5056 were lodged. The ownership of the group was transferred to Air T. The DOCA companies ceased to be in external administration from that date onwards, although the liquidation of Rex Airlines is progressing. Messrs Freeman and Nikitins accordingly seek an order removing the second to fifth plaintiffs as parties to the proceeding. There is no apparent reason why such an order should not be made.

7    The liquidators have continued to take steps to realise and procure the sale of assets owned by Rex Airlines. The only material assets identified by them as belonging to Rex Airlines are rotables (ie components that can be repeatedly removed, repaired, overhauled, and returned to service), tooling and spare parts in connection with Boeing 737-type aircraft and cash in the bank.

8    The assets are subject to security held by the Commonwealth. The liquidators consider the assets to have a value that is substantially less than the value of the creditor claims in the liquidation, including amounts owed by the company to the Commonwealth as a guarantor under historical financing arrangements dealt with in previous judgments dealing with the administration of companies associated with Rex Holdings. See Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) (No 6) [2025] FCA 1312.

9    During the course of the administration of Rex Airlines, the then administrators caused the company to enter into a consignment agreement with C&L Aerospace LLC (C&L). The consignment agreement was dated 28 August 2024 and was amended from time to time including on 5 September 2025, 4 December 2025 and 18 February 2026.

10    In accordance with the terms of the consignment agreement:

(1)    Rex Airlines, as consignor, consigned to C&L, as consignee, certain surplus spare parts and components specific to Boeing 737-type aircraft;

(2)    C&L agreed to use its reasonable commercial efforts to market and sell the parts for the highest prices commercially obtainable;

(3)    in consideration of C&L’s services as consignee, Rex Airlines agreed to pay C&L a commission on the sale of the consignment assets;

(4)    title to the consignment assets remained with Rex Airlines at all times until immediately prior to shipment of an asset to a third-party purchaser, at which point title passed to C&L on an “as is, where is” basis;

(5)    the terms of the consignment agreement were confidential; and

(6)    the term of the consignment agreement was for an initial 12-month period (ie from 28 August 2024 to 28 August 2025).

11    On 5 September 2025, the administrators caused Rex Airlines to enter into a side letter with C&L to vary the initial term under the consignment agreement to 5 December 2025.

12    The consignment agreement and the 5 September 2025 side letter were entered into while the company was under administration with the result that the restrictions in s 477(2B) of the Corporations Act did not apply. Those restrictions include that without requisite approval, including of the Court, a liquidator may not enter into an agreement on the company’s behalf if the term of the agreement may end, or obligations of a party to the agreement may be discharged by performance, more than three months after the agreement is entered into.

13    After the company entered liquidation, the liquidators further extended the consignment agreement by further side letters dated 4 December 2025 and 18 February 2026, but on each occasion for less than three months with the result that approval was not required.

14    The liquidators had intended for all of the consignment assets to be sold as soon as reasonably practicable and, in any event, prior to 5 March 2026, being the expiry date of the term of the consignment agreement as extended by the 18 February 2026 side letter (and approximately three months after the liquidators first caused Rex Airlines to amend the consignment agreement). The liquidators were hoping to realise the value of the consignment assets in a timely manner, both to maximise the return to creditors and to avoid the continued costs and obligations associated with the ongoing liquidation of Rex Airlines. Notwithstanding that, not all of the consignment assets were sold prior to 5 March 2026.

15    In those circumstances, the liquidators consider it essential that the consignment agreement be extended beyond 5 March 2026. The consignment assets represent the primary asset available to the liquidators for realisation in the winding up of Rex Airlines. Without a further extension of the consignment agreement, the liquidators could lose the benefit of C&L’s established marketing channels, industry relationships and specialist expertise in the sale of Boeing 737 spare parts and components, which would materially prejudice the prospects of achieving the best available realisation of the consignment assets.

16    The liquidators consider, and I accept, that the sale of the remaining consignment assets through C&L offers the best prospect of maximising recoveries for creditors; termination of the consignment agreement at this stage would likely result in the realisation of the remaining consignment assets at reduced values, to the detriment of creditors. If the consignment agreement were terminated, the consignment assets would have to be transported to an alternative location which would incur significant additional shipping and stock-taking costs. The liquidators are not aware of any viable alternative arrangement that could be put in place within a reasonable timeframe to replicate the benefit of the consignment agreement. It is naturally to the benefit of all creditors that recoveries are maximised.

17    Further, the liquidators consider, and I accept, that the continuation of the consignment agreement is necessary for the liquidators to be in a position to finalise the liquidation.

18    The liquidators also consider, and I accept, that the extension of the consignment agreement will not unduly lengthen the liquidation. They have explained that following the expiry of the consignment agreement on 5 March 2026, the parties have continued performance of the arrangement in that C&L has continued to market and sell the consignment assets for the benefit of Rex Airlines’ estate with a view to enabling the liquidators to realise the remaining assets in an orderly manner, to maximise recoveries for creditors and to facilitate the deregistration of the company in an expedited manner. The liquidators propose to cause Rex Airlines to enter into a further side letter with C&L to extend the term of the consignment agreement to a date two years hence or to the date on which all the consignment assets have been sold, whichever is the sooner.

19    Having had regard to the relevant principles (as identified in, for example, Hundy (liquidator), in the matter of 3 Property Group 13 Pty Ltd (in liq) [2022] FCA 1216 at [21]-[26] per Wigney J), I am satisfied that to grant approval for entry into the proposed further extension to the consignment agreement pursuant to s 477(2B) of the Corporations Act is in the best interests of the creditors of Rex Airlines and will advance the objectives of Pt 5.4B of the Corporations Act.

20    Notice of an application for s 477(2B) approval is not required to be given to creditors of the company: Re 3 Property Group at [27]. However, the liquidators have provided notice of the application to known creditors and interested parties. None has indicated any opposition to the relief sought or appeared on the hearing of the application.

21    Finally, consistent with Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 571; 144 ACSR 310 at [50]-[52] per Middleton J, the liquidators propose orders requiring them to notify creditors of the orders made on their application and to enable any person demonstrating a sufficient interest to apply to vary or discharge the s 477(2B) approval that I propose to grant. I propose making such orders, which have now become customary.

22    I thus make orders:

(1)    Removing Mr Walsh as a party to the proceeding in his capacity as liquidator of the sixth plaintiff and renaming the first plaintiffs as Samuel Freeman and Adam Nikitins in their capacity as joint and several liquidators of Rex Airlines;

(2)    Removing the second to fifth plaintiffs as parties to the proceeding;

(3)    Granting approval pursuant to s 477(2B) of the Corporations Act to the first plaintiffs to enter into and perform, and cause Rex Airlines to enter into and perform, the consignment agreement with C&L as amended by their proposed further side letter;

(4)    Requiring the first plaintiffs to take all reasonable steps to cause notice of these orders to be given within one business day of making the orders to C&L as well as creditors (including those claiming to be creditors) of Rex Airlines;

(5)    Granting liberty to any person demonstrating a sufficient interest to apply to vary or discharge order 3 on at least two business days’ written notice; and

(6)    That the plaintiffs’ costs of the interlocutory application be treated as costs and expenses in the liquidation of Rex Airlines.

Associate:

Dated:    16 June 2026