Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) (No 4) [2025] FCA 385 (17 April 2025)

In the matter of RCR Tomlinson Ltd (administrators appointed) [2018] NSWSC 1859

In the matter of Renex Holdings (Dandenong) 1 Pty Ltd (administrators appointed) [2015] NSWSC 2003

Korda, in the matter of Ten Network Holdings Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2017] FCA 1144

Krejci, in the matter of Union Standard International Group Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 1111

Mentha, in the matter of Griffin Coal Mining Company Pty Ltd (administrators appointed) [2010] FCA 1469; 82 ACSR 142

Park, in the matter of IG Power (Callide) Ltd (Administrators Appointed) (No 2) [2024] FCA 1244

Sparks, in the matter of IG Energy Holdings (Australia) Pty Ltd [2023] FCA 538; 168 ACSR 104

Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 472

Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717; 144 ACSR 347

IN THE MATTER OF REGIONAL EXPRESS HOLDINGS LTD (ADMINISTRATORS APPOINTED)

SAMUEL FREEMAN, JUSTIN WALSH AND ADAM NIKITINS IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF EACH OF THE SECOND TO SIXTH PLAINTIFFS

REGIONAL EXPRESS HOLDINGS LTD (ADMINISTRATORS APPOINTED)

AIR PARTNERS PTY LTD (ADMINISTRATORS APPOINTED) (and others named in the Schedule)

1. Pursuant to s 447A(1) of the Corporations Act 2001 (Cth) (Corporations Act), Pt 5.3A of the Corporations Act is to operate, nunc pro tunc, in relation to the first plaintiffs (Administrators), the second plaintiff (Rex Holdings), the fourth plaintiff (RIH), the fifth plaintiff (Regional Express) and the sixth plaintiff (RAL) (each as applicable), as if s 443A(1) of the Corporations Act provides that:

(a) any liabilities of the Administrators incurred (in their capacity as joint and several administrators of Rex Holdings, RIH, Regional Express and RAL (each as applicable)) with respect to any obligations arising out of, or in connection with the:

(i) Department of Transport Deeds;

(ii) Etihad Side Letter;

(iii) Sydney Airport Licence;

(iv) Stantec Agreement;

(v) Adelaide Airport Deed;

(vi) Baxter Road Lease;

(vii) Westpac Agreement and Bank Guarantee;

(viii) Webjet Agreement;

(ix) C&L Consignment Agreement;

(x) Access Framework Agreement; and

(xi) Nextant Pacific Agreement,

each as defined in paragraph 20 of the affidavit of Samuel John Freeman affirmed 10 April 2025 (Freeman Affidavit) (together, the Current Agreements and each, a Current Agreement) are in the nature of debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of Rex Holdings, RIH, Regional Express and RAL (each as applicable); and

(b) notwithstanding that the liabilities in subparagraph 1(a) are debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of Rex Holdings, RIH, Regional Express and RAL (each as applicable), the Administrators will not be personally liable to repay such debts or satisfy such liabilities to the extent that the assets of Rex Holdings, RIH, Regional Express and RAL (each as applicable) are insufficient to satisfy the debts and liabilities incurred by the Administrators arising out of, or in connection with, the Current Agreements (but, for the avoidance of doubt, nothing in this order affects whether or not the Administrators have a right of indemnity by reason of s 443D of the Corporations Act).

1. Pursuant to s 447A(1) of the Corporations Act and s 90-15 of the Insolvency Practice Schedule (Corporations), being Sch 2 to the Corporations Act (IPSC), the Administrators are to provide notice to each counterparty to the Current Agreements of the order in paragraph 1 above, with liberty to be granted to each such counterparty in accordance with paragraph 10(a) below.
2. Pursuant to s 447A(1) of the Corporations Act, Pt 5.3A of the Corporations Act is to operate in relation to the Administrators, RAL and Rex Holdings as if s 443A(1) of the Corporations Act provides that:

(a) the liabilities of the Administrators (in their capacity as joint and several administrators of each of RAL and Rex Holdings) incurred with respect to any obligations arising out of, or in connection with the:

(i) Active Industry Sales Agreement;

(ii) Cargo Agreements;

(iii) Active Lease Agreement;

(iv) Software and Licensing Agreements;

(v) Merchant Agreements; and

(vi) Procurement Agreements,

each as defined in paragraph 40 of the Freeman Affidavit (together, the RAL Contracts and each, a RAL Contract), upon being novated, are in the nature of debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of each of RAL and Rex Holdings; and

(b) notwithstanding that the liabilities in subparagraph 3(a) are debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of each of RAL and Rex Holdings, the Administrators will not be personally liable to repay such debts or satisfy such liabilities to the extent that the assets of RAL or Rex Holdings are insufficient to satisfy the debt and liabilities incurred by the Administrators arising out of, or in connection with, the RAL Contracts upon being novated (but, for the avoidance of doubt, nothing in this order affects whether or not the Administrators have a right of indemnity by reason of s 443D of the Corporations Act).

1. Pursuant to s 447A of the Corporations Act and s 90-15 of the IPSC, the Administrators are to provide notice to each counterparty to the RAL Contracts of the order in paragraph 3 above prior to that counterparty entering into any novation of a RAL Contract.
2. Pursuant to s 90-15 of the IPSC, the Administrators are justified in entering into and performing (and causing RAL and Rex Holdings to enter into and perform) a novation of the RAL Contracts.
3. Pursuant to s 447A(1) of the Corporations Act and s 90-15 of the IPSC, Pt 5.3A of the Corporations Act is to operate in relation to the plaintiffs as if s 443A(1) of the Corporations Act provides that:

(a) the liabilities of the Administrators (in their capacity as joint and several administrators of each of the second to sixth plaintiffs (Rex Companies)) incurred with respect to any obligations arising out of, or in connection with, any future:

(i) aircraft operating leases, which may be entered into for the purpose of leasing and operating aircraft (including maintenance of aircraft) in order to carry out the operations of the Rex Companies' regional business;

(ii) alliance agreements, being international arrangements established with various global airlines that provide the Rex Companies with a long distance international network;

(iii) procurement contracts, including:

1. in-flight services agreements, being agreements entered into for the provision of food and beverage and other retail on-board services, catering and entertainment on flights operated by the Rex Companies;
2. ground handling agreements, being agreements entered into for the provision of ground handling services for the Rex Companies' flight arrivals and departures at national airports;
3. operational systems agreements, being agreements entered into for the provision of support and maintenance services in relation to licenced software, systems, platforms and network infrastructure;
4. fuel agreements, being agreements entered into for the supply and delivery of fuel to the Rex Companies at various locations throughout Australia;
5. maintenance and parts agreements, being agreements entered into for the provision of maintenance, repair and modification services for aircraft operated by the Rex Companies, including the provision of the relevant component parts; and
6. IT agreements, being agreements entered into for the provision of core computer infrastructure and end user computing support services and business services to the Rex Companies;

(iv) departmental agreements, being agreements entered into with State and Federal governments for the supply of scheduled public air transport services to nominated remote destinations in Australia;

(v) airport agreements, being agreements entered into with major airports across Australia, for the use of terminal gates, public spaces and facilities and for sub-leases in relation to each of the Rex Companies' airport lounges;

(vi) charter agreements, being agreements entered into with various major companies for the supply of scheduled air transport services for personnel and freight to nominated destinations agreed between the parties to the agreement;

(vii) cargo agreements, being agreements entered into for the handling of cargo and the provision of management, administration and support services;

(viii) corporate sales agreements, being agreements entered into with major travel agents and other platforms, including with both government and private counterparties, which set out incentives offered by the Rex Companies for the sale of "Rex" flights by the relevant agents;

(ix) industry/agency agreements, being agreements entered into which provide for the preferred supply by the Rex Companies of flight services to each of its clients, including with both government and private counterparties;

(x) training agreements, being agreements entered into to provide ongoing training to crew members;

(xi) licence and leasing arrangements, being agreements entered into with registered owners of land, buildings, or other premises to enable the Rex Companies to conduct operations, including but not limited to airport facilities, offices, hangars, and training centres; and

(xii) the Expired RAL Contracts (as defined in paragraph 55 of the Freeman Affidavit),

(together, the Future Agreements and each, a Future Agreement) are in the nature of debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of each of the Rex Companies; and

(b) notwithstanding that the liabilities in subparagraph 6(a) are debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of each of the Rex Companies, the Administrators will not be personally liable to repay such debts or satisfy such liabilities to the extent that the assets of the particular Rex Company or Rex Companies that is or are party to a particular Future Agreement are insufficient to satisfy the debts and liabilities incurred by the Administrators arising out of, or in connection with, the Future Agreements (but, for the avoidance of doubt, nothing in this order affects whether or not the Administrators have a right of indemnity by reason of s 443D of the Corporations Act).

1. Pursuant to s 447A of the Corporations Act and s 90-15 of the IPSC, the Administrators are to provide notice of the order in paragraph 6 above to any counterparty to a Future Agreement prior to that counterparty entering into a Future Agreement.
2. Until the conclusion of the administration of the Rex Companies or further order of the Court, pursuant to s 37AF(1)(b)(i) of the Federal Court of Australia Act 1976 (Cth), on the ground stated in s 37AG(1)(a), being that the order is necessary to prevent prejudice to the proper administration of justice:

(a) paragraphs 16 to 18, 20(a) to 20(j), 29(a) to 29(e), 40(a) to 40(f), and 55(a) to 55(c) of the Freeman Affidavit; and

(b) Confidential Exhibit SJF-7 exhibited to the Freeman Affidavit,

be kept confidential and be prohibited from disclosure to any person other than to a Judge of the Court and such staff of the Court who are required to have access for the purpose of performing the obligations of their employment at the Court as well as the plaintiffs and their legal representatives and such persons to whom they have disclosed the material in the performance of the administration on the condition of the maintenance of confidentiality (with such order to operate throughout the Commonwealth of Australia).

1. The Administrators take all reasonable steps to cause notice of the Court's orders to be given, within one (1) business day of the making of the orders to:

(a) creditors (including persons or entities claiming to be creditors) of the Rex Companies, in accordance with order 4 of the orders made in this proceeding on 6 August 2024;

(b) counterparties to the Current Agreements, in accordance with paragraph 2 above; and

(c) the Australian Securities and Investments Commission.

(a) any counterparty to the Current Agreements to apply to vary or discharge the orders made in paragraph 1 above; and

(b) any person demonstrating a sufficient interest to apply to vary or discharge any orders made above,

on two (2) business days' written notice being given to the plaintiffs and to the Court.

1. The plaintiffs' costs of the application be treated as costs in the administrations of each of the Rex Companies, jointly and severally.

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

1. The plaintiffs are the three joint and several administrators of each of five companies in the Rex Group of companies and each of those companies (referred to as the Rex Companies). By interlocutory process accepted for filing on 11 April 2025, the plaintiffs seek orders that the administrators not be personally liable under certain contracts entered into or to be entered into by them and for related directions.
2. The three administrators are Samuel Freeman, Justin Walsh and Adam Nikitins of the Turnaround and Restructuring Strategy division of the professional services firm that trades as Ernst & Young Australia. They are together cited in their capacity as the joint and several administrators of each of the Rex Companies as the first plaintiff.
3. The Rex Companies are:

(1) Regional Express Holdings Ltd (administrators appointed) (Rex Holdings), the second plaintiff;

(2) Air Partners Pty Ltd (administrators appointed), the third plaintiff;

(3) Rex Investment Holdings Pty Ltd (administrators appointed), the fourth plaintiff;

(4) Regional Express Pty Ltd (administrators appointed), the fifth plaintiff; and

(5) Rex Airlines Pty Ltd (administrators appointed), the sixth plaintiff.

1. Rex Holdings is the ultimate holding company for each of the third to sixth plaintiffs. There are a number of other companies in the Rex Group of which Rex Holdings is also the ultimate holding company but which are not in external administration.
2. In detail, the interlocutory process seeks:

(1) orders under s 447A(1) of the Corporations Act 2001 (Cth) limiting the administrators' personal liability to the extent of their right of indemnity from the assets of the relevant Rex Company with respect to 11 agreements which the administrators have caused one or more of the Rex Companies to enter into during the course of the administrations (Current Agreements);

(2) orders under s 447A(1) limiting the administrators' personal liability to the extent of their right of indemnity from the assets of Rex Holdings with respect to six categories of agreements which the administrators intend to cause to be novated from Rex Airlines to Rex Holdings in connection with the ongoing sale process (RAL Contracts);

(3) directions under s 90-15 of the Insolvency Practice Schedule (Corporations) (IPSC) (which is Sch 2 to the Corporations Act) that the administrators are justified in entering into and performing (and causing Rex Holdings to enter into and perform) the RAL Contracts upon being novated;

(4) orders under s 447A(1) limiting the administrators' personal liability with respect to certain agreements which the administrators intend to cause Rex Holdings to enter into to replace agreements with Rex Airlines which have expired (comprising a sub-set of Future Agreements);

(5) orders under s 447A(1) limiting the administrators' personal liability with respect to specified categories of future agreements which the administrators anticipate they may need to cause one or more of the Rex Companies to enter into during the balance of the administrations (so to avoid the need to approach the Court again) (these are also part of the Future Agreements); and

(6) a suppression order as to the terms of the existing or proposed agreements with specific counterparties referred to above and in respect of aspects of the evidence before the Court.

1. I am satisfied that the administrators have given notice of their application by email to all known creditors (of which there are about 4,800 excluding customer creditors) of the Rex Companies for whom they have email addresses and by post to those for whom they do not have email addresses or from whom they received bounce-back emails. Customer creditors are customers of the Rex Companies who were affected by flight cancellations. Email notifications were also sent to them, of whom 48,331 remain registered, some 2,500 having unsubscribed from further notifications.
2. Each of the counterparties to the Current Agreements was also given notification of the application by email, as were the Australian Securities and Investments Commission, the Commonwealth and each member of the Committee of Inspection.
3. Only one response to all those notifications was received, that being from solicitors on behalf of Sydney Airport Corporation Ltd which is the counterparty to one of the Current Agreements. I will return to the issue raised in that response.
4. No interested party appeared at the hearing of the application.

Applicable principles on the limitation of the administrators' personal liability

1. Section 443A of the Corporations Act, which forms part of Pt 5.3A, relevantly provides that:

(1) The administrator of a company under administration is liable for debts he or she incurs, in the performance or exercise, or purported performance or exercise, of any of his or her functions and powers as administrator, for:

(a) services rendered; or

(b) goods bought; or

(c) property hired, leased, used or occupied, including property consisting of goods that is subject to a lease that gives rise to a PPSA security interest in the goods ...

(2) Subsection (1) has effect despite any agreement to the contrary, but without prejudice to the administrator's rights against the company or anyone else.

1. Sections 443D, 443E and 443F of the Corporations Act provide a right of indemnity out of the company's property (other than certain property that is not relevant for present purposes) for the debts for which an administrator is liable under s 443A. That right is secured by a statutory lien over the company's property (as well as an equitable lien operating in parallel to the statutory regime). That means that the administrators are entitled to be reimbursed out of the assets of the relevant Rex Company to meet debts for which they are personally liable. However, unless an order is made under s 447A of the Corporations Act limiting the extent of their liability to the assets of the Rex Companies, the Administrators would have potentially unlimited personal liability: see Korda, in the matter of Ten Network Holdings Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2017] FCA 1144 at [43] per Markovic J.
2. The power under s 447A extends to making orders limiting an administrator's personal liability under s 443A(1). In Mentha, in the matter of Griffin Coal Mining Company Pty Ltd (administrators appointed) [2010] FCA 1469; 82 ACSR 142 at [30], Gilmour J identified the relevant principles which I adopt:

The principles governing the granting of an application for orders under s 447A to vary the liability of administrators under s 443A can be summarised as follows:

(a) the proposed arrangements are in the interests of the company's creditors and consistent with the objectives of Pt 5.3A of the Corporations Act: Re Great Southern [Infrastructure Pty Ltd; Ex parte Jones [2009] WASC 161] at [13];

(b) typically the arrangements proposed are to enable the company's business to continue to trade for the benefit of the company's creditors: Re Malanos [[2007] NSWSC 865] at [9] and Re View [Gold Pty Ltd, View Resources Ltd & View Nickel Pty Ltd [2008] WASC 241] at [17];

(c) the creditors of the company are not prejudiced or disadvantaged by the types of orders sought and stand to benefit from the administrators entering into the arrangement: Re View at [18], and also Re Application of Fincorp Group Holdings Pty Ltd [2007] NSWSC 628 at [17];

(d) notice has been given to those who may be affected by the order: Re Great Southern at [12].

1. The rationale for making such orders is that administrators should not be expected to incur substantial personal liabilities or, at least, the risk of them, in taking steps for the ultimate benefit of creditors: Park, in the matter of IG Power (Callide) Ltd (Administrators Appointed) (No 2) [2024] FCA 1244 at [15] per Derrington J. Such an order can be made after the agreement is entered into: In the matter of Renex Holdings (Dandenong) 1 Pty Ltd (administrators appointed) [2015] NSWSC 2003 at [14] per Black J.
2. A factor in favour of limiting an administrator's personal liability is if the liabilities to which the administrator may be exposed are substantial: Ten Network at [44]. By way of illustration, in Griffin Coal, orders limiting the administrators' personal liability under certain post-appointment mining leases and licences were made on the basis that the orders were consistent with the policy rationale of s 443A, which is to encourage suppliers, customers and employees to continue to deal with a company in administration during the administration period, by, in effect, ensuring that they will be paid. Also, they were consistent with the objectives of the administration process as a whole as embodied in s 435A, being that the business of the company will continue to trade or, if that is not possible, the returns to creditors will be greater than in an immediate winding up. (At [37].)

Applicable principles on directions under IPSC s 90-15

1. Section 90-15(1) of the IPSC confers on the court a power to make orders as it thinks fit in relation to the external administration of a company. The administrators are persons with standing to make an application under s 90-15(1): ss 90-20(1)(a), 5-30(a)(iii) and 5-20(a).
2. The principles relating to applications for judicial directions under that provision were summarised in Krejci, in the matter of Union Standard International Group Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 1111 at [7]- [11]:

(1) the "very broad" power under s 90-15 includes power to give directions about a matter arising in connection with the performance or exercise of an administrator's functions or powers;

(2) the function of a direction under s 90-15 is to confer a level of protection on an administrator against claims they have acted unreasonably or inappropriately or in breach of their duty in making the relevant decision or undertaking the relevant conduct; and

(3) the court may give a direction on an issue of "substance or procedure" or "of power, propriety or reasonableness".

1. The Court's preparedness to issue a judicial direction will depend on the circumstances of each request by the liquidators or administrators, noting that courts have previously given directions where a decision, substantially commercial in character, is complex, made under time pressure and involves balancing competing interests in respect of a large corporate group: Sparks, in the matter of IG Energy Holdings (Australia) Pty Ltd [2023] FCA 538; 168 ACSR 104 at [22] per Halley J. The present is just such a case. The court's preparedness to give directions in such circumstances "reflects the intrinsic unfairness of leaving a voluntary administrator to be at risk of liability, in respect of a complex decision of that kind, where any decision that is made, including making no decision, will have inevitable risks for some or all of the affected constituencies": In the matter of RCR Tomlinson Ltd (administrators appointed) [2018] NSWSC 1859 at [14] per Black J.

1. The administrators were appointed as joint and several administrators of each of the Rex Companies on 30 July 2024, following the passing of a resolution of the directors of those companies pursuant to s 436A of the Corporations Act.
2. The business of the Rex Companies is primarily the operation of an airline in the Australian domestic passenger and freight industry, with a particular focus on servicing regional locations by the operation of flights to and from regional or rural airports throughout Australia. That is the companies' regional business.
3. In broad terms, the structure and functions of the Rex Companies are as follows.
4. Rex Holdings is the parent company of the Rex Group and its securities are listed on the Australian Securities Exchange, although they have been suspended since the commencement of the administration.
5. Air Partners is an investment vehicle for other businesses of the Rex Group, holding 100% of the shares in Rex Flyer Pty Ltd and Pel-Air Aviation Pty Ltd, and 50% of the shares in National Jet Express Pty Ltd. These entities are not in administration and the shares in Pel-Air Aviation and National Jet Express have since been sold by the administrators.
6. Rex Investment Holdings is also an investment vehicle for other business of the Rex Group, holding 100% of the shares in four subsidiaries including Australian Aero Propeller Maintenance Pty Ltd and the Australian Airline Pilot Academy Pty Ltd. Again, these entities are not in administration.
7. Regional Express operates the Rex Group's commercial passenger flights, holding 100% of the shares in Rex Airlines.
8. Rex Airlines is the entity that carried on the business of passenger flights between major metropolitan cities (Sydney, Melbourne and Brisbane) serviced by Boeing 737 aircraft. These are referred to as the companies' metropolitan routes but that part of the business has ceased operation. The administrators caused the employment of 344 employees of Rex Airlines to be terminated as a consequence of the cessation of the metropolitan routes. The employee entitlements owing to those employees are claimable by the employees following an advance declaration made by the Commonwealth pursuant to s 49(1) of the Fair Entitlements Guarantee Act 2012 (Cth) which permits those employees to have access to the statutory scheme for payment of their entitlements up to a maximum amount: see Fair Entitlements Guarantee (Rex Airlines Pty Ltd in Administration) Declaration 2024 (Cth).
9. The administrators are continuing to trade the regional business on a "business as usual" basis. The regional business provides an important service to regional and remote communities in Australia. It is the sole operator of flights in approximately eight regional markets in addition to operating other routes in regional markets. It operates critical service routes between major cities and regional centres that have limited alternative transport options, providing travel for both patients and doctors to enable the provision of certain medical services in regional communities. It also delivers mail and other freight for Australia Post and other customers on certain routes across the regional network.
10. Apart from employees and certain customers whose flights were cancelled and who were not able to take up an offer of free alternative travel from other domestic airlines, the creditors of the Rex Companies include the following:

(1) the Commonwealth, which is a secured creditor and a party to certain finance arrangements with the Rex Companies - the Commonwealth acquired the debts and securities of PAGAC Regulus Holding Pte Ltd and it is now the senior secured creditor of the Rex Companies;

(2) Westpac Banking Corporation, which is party to various cash advance facilities with (or guaranteed by) the Rex Companies;

(3) other creditors with security interests registered on the Personal Property Securities Register;

(4) trade creditors and statutory authorities; and

(5) related-party creditors.

1. There have been previous applications to the Court in relation to the administration of the Rex Companies, each having been dealt with by the relevant duty judge either before the matter was allocated to a docket judge or because of the unavailability at the relevant time of the docket judge:

(1) Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) [2024] FCA 929 in which Yates J made extensive orders on 6 August 2024 dealing with notice of the first meeting of creditors, the conduct of the first meeting of creditors, a committee of inspection, an extension of time to respond to creditor requests, the limitation of the administrators' personal liability pursuant to certain finance documents, a suppression or non-publication order in relation to the finance documents and relief in relation to the general meeting required under s 249D of the Act;

(2) Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) (No 2) [2024] FCA 968 (In re Rex No 2) in which Cheeseman J made orders on 23 August 2024 extending the time for the convening of the second meeting of creditors, dealing with the conduct of the second meeting of creditors and limiting the administrators' personal liability pursuant to a deed of guarantee; and

(3) Freeman, in the matter of Regional Express Holdings Ltd (administrators appointed) (No 3) [2024] FCA 1394 (In re Rex No 3) in which Markovic J made orders on 20 November 2024 further extending the time for the convening of the second meeting of creditors, giving a direction under s 90-15 of the IPSC in relation to the administrators being justified in entering into and performing certain Commonwealth Finance and Security Agreements and limiting the administrators' personal liability in respect of those agreements.

1. The reasons for judgment in each of those applications give further background and detail about the administrations of the Rex Companies.

1. In August 2024, the administrators commenced a competitive process for the recapitalisation of the business or the sale of the assets of the Rex Companies. The administrators retained investment bank Houlihan Lokey to assist them in conducting the sale process.
2. From 2 August 2024 and thereafter, Houlihan Lokey issued a flyer and non-disclosure agreement to potential interested parties. Then on and from 14 August 2024, Houlihan Lokey issued a more detailed information memorandum to potential interested parties and established a data room containing information relating to the business and financial position of the Rex Companies.
3. The initial sale process achieved the sale of the following assets: the aeromedical business carried on by Pel-Air Aviation, which includes the business and assets of NAA Pty Ltd and VAA Pty Ltd, for consideration that reflected an enterprise value of $192.5 million (with cash consideration of approximately $47 million); the shares held by Air Partners in National Jet Express, being the fly-in-fly-out charter business operated by the Rex Group; and certain real property located in Mascot, NSW.
4. By November 2024, the administrators had not received any binding proposal for the sale of the regional business that was credible or otherwise capable of acceptance for the sale and purchase of the regional business. The administrators received feedback from bidders that there were a number of issues with the regional business which led to the initial sale process not resulting in the sale of the regional business. Instead, the administrators caused the Rex Companies to obtain further funding from the Commonwealth to invest in improving the assets and operations of the Rex Companies with a view to a further sale process.
5. With the further Commonwealth funding, a business improvement strategy aimed at re-establishing the regional business's ability to operate its regional network in a financially sustainable manner was undertaken with a view to undertaking the further sale process for the regional business. In order to fund that strategy, and the ongoing trading of the regional business during the proposed continuation of the administration of the Rex Companies, the administrators entered into a suite of finance and security documents with the Commonwealth. These are referred to as the Commonwealth Finance and Security Agreements. Pursuant to those agreements, the Commonwealth agreed to advance funding of up to $80 million.
6. In connection with the business improvement strategy and the Commonwealth Finance and Security Agreements, the administrators sought a further extension of the convening period of the administrations until 30 June 2025. That was to enable the administrators to implement the business improvement strategy, enhance the assets of the Rex Companies, engage with interested parties for the sale or restructure of the regional business and progress the further sale process. The aforementioned matters are the subject of In re Rex No 3 and the orders made on 20 November 2024.
7. Since then, the administrators have continued to trade the regional business and they have undertaken their identified business improvement strategy.
8. The administrators have also taken a series of steps in connection with the further sale process, including negotiating the sale of pilot academies operated by two wholly owned subsidiaries of Rex Investment Holdings and selling certain assets of the Rex Companies which are otherwise surplus to their ongoing requirements. The administrators have also instructed Houlihan Lokey to prepare a new information memorandum and data room in connection with the further sale process for the regional business and an indicative timeline for that sale process has been set.
9. The administrators have conducted a review of the books and records of the Rex Companies to determine which arrangements are critical for the future operations and successful sale of the regional business, including an analysis of the contractual relationships between the Rex Companies and their contractual counterparties. In the course of that review, the administrators have done a number of things.
10. First, they have caused the Rex Companies to enter into a number of agreements during the course of the administrations which they regarded as critical to the ongoing operation of the regional business and therefore the further sale process. As mentioned at the outset, those are referred to as the Current Agreements.
11. Secondly, the administrators have recognised that certain agreements with counterparties which are critical to the ongoing operation of the regional business will need to be novated from Rex Airlines to Rex Holdings. These are referred to as the RAL Contracts. That need has arisen from the cessation of the business of offering passenger flights on metropolitan routes and the fact that neither Rex Airlines nor its former business will form part of the further sale process.
12. Thirdly, the administrators have identified certain specific agreements, and certain categories of agreements, which they anticipate causing the Rex Companies, other than Rex Airlines, to enter into during the future course of the administrations in connection with the continuing operation of the regional business and the further sale process. Some of these proposed agreements are intended to replace agreements with Rex Airlines which have expired These are collectively referred to as the Future Agreements.

1. The Current Agreements which the administrators have caused the Rex Companies to enter into are set out in the evidence. The nature of those agreements and the parties to them are commercially confidential in nature and the administrators seek suppression orders over that evidence. Although several pre-existing agreements between the Rex Companies and various counterparties remained in force during the administration, they were insufficient to maintain business continuity for the regional business. The Current Agreements were entered into because the pre-existing agreements dealing with those matters were approaching the end of their contractual terms or new agreements were required to maintain efficient ongoing operations of the regional business. That included to secure key operational inputs, to maintain essential commercial relationships and to uphold the service levels of the regional business. The multiplicity of new agreements being entered into by the Rex Companies (other than Rex Airlines) is not unexpected where the administrators have caused a business of the size and complexity of the regional business to continue to trade for a period of almost nine months while the administration has been on foot.
2. In anticipation of this application, the administrators included limited recourse and limitation of liability clauses in each of the Current Agreements. The counterparties in each case agreed to the inclusion of those terms. Typically, the clauses limit the liability of the administrators to the maximum of what recourse they have by way of indemnity against the assets of the relevant companies under s 443D except for any liability arising out of their own fraud or wilful default that disentitles them from such an indemnity.
3. I accept that without their liability being limited, the administrators may need to consider whether they can continue to trade the regional business and may need to reconsider the Rex Companies having entered into and continuing to perform the Current Agreements in view of the potential personal liability they face.
4. Although the counterparties to the Current Agreements agreed to the inclusion of the limitation of liability provisions, the administrators intend to give notice, to each of those counterparties, of any order made to limit their liability. In view of the fact the counterparties to the Current Agreements have already agreed to the inclusion of the limitation of liability clauses, the administrators do not consider that those counterparties will be prejudiced by the making of the proposed orders. That is to say, the counterparties willingly chose to contract on terms that limited the administrators' exposure under those contracts to the assets of the applicable Rex Company and the effect of the orders sought is merely to confirm the effect of those terms in light of s 443A(2) of the Corporations Act which provides that the administrators have personal liability as set out in s 443A(1) despite any agreement to the contrary.

1. As mentioned, solicitors for Sydney Airport Corporation Ltd, also referred to as SYD, responded to the notice to counterparties. In their letter, dated 15 April 2025, they ask that the administrators' proposed orders be amended to clarify that they will not override any contractually agreed position between SYD and the administrators acting on behalf of the Rex Companies or, failing that, their letter be presented to the Court on the hearing of the application. The letter is now before me.
2. SYD and the administrators in the name of Rex Holdings concluded a "Licence for staff to use car parks" on 24 January 2025. Clause 13A(a)(i) of that agreement records that the administrators enter into it only in their capacity as joint and several administrators of Rex Holdings. Clauses 13A(a)(iv) and (vi) provide that the administrators are not personally liable for, and do not accept or assume any personal liability for, any loss or liability of SYD, but that in the event that the administrators do incur any personal liability it is limited to the extent to which they are actually indemnified for that liability out of the assets of Rex Holdings at law or in equity. Clause 13A(b) then provides that notwithstanding cl 13A(a), the administrators are liable personally and are not released in respect of loss or liability that "arises out of their own fraud, gross negligence ..., misconduct, wilful act or omission or default that disentitles them from indemnity out of the assets of [Rex Holdings] in relation to the relevant Loss or Liability."
3. The solicitors for SYD say in their letter that the orders sought by the administrators would overrule the relevant exclusions that have been contractually agreed between SYD and the administrators. They say that the "contractually agreed position" in cl 13A should continue to apply.
4. In my assessment, the orders that are sought by the administrators will not affect any material change to the personal liability position as between the administrators and SYD. That is because under cl 13A the administrators' personal liability is excluded or, if for some reason it is not excluded, it is limited to the amount to which the administrators are indemnified out of the assets of Rex Holdings, unless the liability arises from the administrators' own fraud, gross negligence, etc., that disentitles them from indemnity out of the assets of Rex Holdings. The administrators would be so disentitled under s 443D(aa) of the Corporations Act where the liability was not incurred "in good faith and without negligence". The orders proposed by the administrators in the interlocutory process do not alter that position. However, for the avoidance of doubt, the administrators now propose an amendment by the insertion of "(but, for the avoidance of doubt, nothing in this order affects whether or not the Administrators have a right of indemnity by reason of s 443D of the Corporations Act)" at the end of each relevant order. The amendment puts the matter beyond doubt.
5. There is a way in which the orders will change the position of the administrators' liability as between them and SYD which has not been raised by SYD. It arises in this way. Section 443A(2) of the Corporations Act provides that the imposition of personal liability on the administrators under s 443A(1) "has effect despite any agreement to the contrary". The consequence of that is that the exclusion of any personal liability of the administrators in cl 13A(a)(iv) (subject to the fault exception in cl 13A(b)) is ineffective in the absence of an overriding order of the Court under s 447A. Thus, the orders sought by the administrators will, for the first time, give effect to the exclusion of personal liability in cl 13A(a)(iv).
6. As I read and understand the letter from the solicitors for SYD, and in particular its use of the language of "the contractually agreed position", the point they make is that the position as recorded in the agreement between SYD and the administrators should be maintained, and not that the position as recorded in the agreement subject to the inefficacy of cl 13A(a)(iv) because of the operation of s 443A(2) should be maintained. That is also the natural position for SYD to take, because it would otherwise be adopting a deceptive position by saying that the administrators should be personally liable notwithstanding SYD's express agreement to the contrary.
7. In the circumstances, I am satisfied that the concerns raised by the solicitors for SYD are adequately accommodated by the orders that are now sought by the administrators.

1. The proposed novation of various contracts which are essential to the continued operation of the regional business, from Rex Airlines to Rex Holdings, is a key component of the restructuring undertaken by the administrators. These contracts are pre-appointment service and procurement-related agreements to which Rex Airlines, of the entities within the Rex Group, is the relevant counterparty.
2. There are 14 such agreements in six categories. It is not clear to the administrators why, prior to their appointment, the directors and management personnel of the Rex Group caused Rex Airlines to be the Rex Group contracting entity given that the services provided under the agreements were not limited to the business of offering passenger flights on metropolitan routes (which was the business conducted by Rex Airlines) and those services also benefit (and are important assets of) the regional business.
3. As mentioned, the business and assets of Rex Airlines do not form part of the assets that are the subject of the further sale process. In order to be able to sell or restructure the regional business with the benefit of those contracts on foot, they need to be novated to Rex Holdings. The administrators' view is that the proposed novations are therefore necessary to provide certainty to prospective purchasers of the regional business by ensuring that it has the necessary agreements in place that are unaffected by the possible excision of Rex Airlines from any proposed transaction. The administrators' view is that the cost and time of negotiating with new counterparties if the RAL Contracts are not retained in the operation of the regional business would make the sale of the regional business as a going concern impractical, especially given that the end of the convening period is now less than three months away.
4. The administrators intend to include a clause in each of the novated RAL Contracts that to the extent a counterparty has a provable debt or claim against Rex Airlines arising from circumstances prior to the administrators' appointment, that debt or claim is preserved in the external administration of Rex Airlines. That is to say, pre-appointment liabilities are not being shifted from one company to another. Furthermore, in circumstances where the RAL Contracts do not directly generate revenue or profit for any of the Rex Companies, the administrators' view is that the novation will not diminish potential recoveries otherwise available to the creditors of Rex Airlines. The administrators submit that the proposed novations will not visit any prejudice on the creditors of Rex Airlines, or on any of the other Rex Companies.
5. It is also intended that the novated RAL Contracts will include a limited recourse clause and limitation of liability clause in materially identical terms to that contained in the Current Agreements as discussed above.
6. Finally, the administrators intend to provide notice to the counterparties to the RAL Contracts of the orders limiting their liability, if made.

1. The third category of agreement the subject of the application is the Future Agreements. There are two types of Future Agreements. First, and as mentioned, there are a series of proposed agreements which are intended to replace agreements with Rex Airlines which have expired. These are referred to as the Expired RAL Contracts. There are 15 such agreements in three categories. Second, there are 11 categories of agreements which the administrators anticipate they may be required to cause the Rex Companies to enter into between now and the conclusion of the administrations, such as aircraft operating leases, procurement contracts, airport agreements, cargo agreements and licence and leasing agreements.
2. The administrators' view is that the Future Agreements are (or are likely to be) critical to the continued operation of the regional business and the viability of the further sale process. That is because those contracts cover matters such as essential services, infrastructure, fuel supply, ground handling, aircraft maintenance and operational systems, which are essential to ensuring that the regional business remains operational while the further sale process is on foot. The administrators are progressing negotiations with counterparties in relation to a number of the Future Agreements.
3. The administrators intend to include a limited recourse clause and a limitation of liability clause in each of the Future Agreements in the form discussed above for the Current Agreements. In addition, they intend to give notice of any orders limiting their personal liability prior to the execution of any Future Agreement. It is envisaged that this be required by the proposed orders sought on the present application.

Should the administrators' personal liability be limited?

1. I am satisfied that the proposed arrangements to vary the liability of the administrators from that which otherwise pertains under s 443A are in the interests of the companies' creditors and that they are consistent with the objectives of Pt 5.3A of the Corporations Act as recorded in s 435A. The arrangements are proposed to enable the Rex Companies' business to continue to trade for the benefit of the companies' creditors. Moreover, I am satisfied that the creditors of the companies are not prejudiced or disadvantaged by the orders that are sought and that they will stand to benefit from the administrators entering into the arrangements. As mentioned, notice has been given to those who may be affected by the orders. In any event, the orders sought by the administrators envisage granting liberty to apply to any counterparty to the Current Agreements or any person demonstrating a sufficient interest to apply to vary or discharge any of the orders that are sought.
2. My satisfaction in relation to the above matters arises from the following considerations.
3. First, the administrators caused the Rex Companies to enter into the Current Agreements having formed the view that they were necessary for the continuing operations of the regional business and that it was impractical and inefficient to seek orders from the Court on multiple occasions limiting their liability in respect of each of the separate agreements. I accept that there was a substantial degree of urgency in concluding the Current Agreements in order to avoid business disruption and ensure the continued operations of the large and complex business.
4. The agreements were entered into to enable the business of the Rex Companies to continue to trade for the benefit of their creditors. Further, the liabilities to which the administrators may be exposed under the Current Agreements are substantial. There can be no prejudice to the counterparties to the Current Agreements in circumstances where they have agreed to the inclusion of the limited recourse and limitation of liability clauses in those agreements. These matters indicate that, in accordance with the authorities, it is appropriate to limit the administrators' personal liability under the Current Agreements.
5. Secondly, in relation to the RAL Contracts, the rationale for their novation from Rex Airlines to Rex Holdings is clear in circumstances where the existing agreements are critical to the ongoing operations of the regional business and Rex Airlines will not form part of the further sale process because of the cessation of the business of flights on the metropolitan routes. Each of the counterparties to those agreements will be on notice of the limitation of the administrators' liability prior to execution of the novation deeds. In the absence of limitation of their personal liability, and being understandably cautious as to the prospect of unlimited personal risk, the administrators may otherwise cause the Rex Companies not to enter into the novated RAL Contracts. The consequence of that would likely adversely affect the further sale process and the sale price that could be achieved for the regional business. For the reasons outlined above, there is no prejudice to those counterparties in circumstances where the novation deeds will specifically preserve their pre-appointment claims against Rex Airlines and where the RAL Contracts are otherwise not directly revenue-generating on the part of Rex Airlines. As to the proposed limitation of the administrators' personal liability, each of those counterparties in the assessment of its own commercial interests is free to determine whether or not to enter into a novation deed containing clauses limiting the liability of the administrators.
6. Thirdly, the specific Future Agreements which are intended to replace the Expired RAL Contracts are also critical for the ongoing operation of the regional business. I accept that they must be in place with certainty of continuity prior to the any transaction that is hoped to be achieved from the further sale process. That is in order to maximise the sale price that can be achieved and thus the return to creditors of the Rex Companies.
7. Again, in the absence of limitation of their personal liability, the administrators, justifiably concerned with their personal risk, may have to revisit whether to cause Rex Holdings to enter into the agreements to replace the Expired RAL Contracts. That would potentially jeopardise the continuing operations of the regional business and, thus, any success in the ongoing further sale process. It is open to any of the counterparties to the specifically named Expired RAL Contracts to decline to enter into a replacement agreement with Rex Holdings containing the proposed limitations of the administrators' personal liability, or to further negotiate the terms of those agreements should they see fit to do so.
8. Fourthly, in relation to the categories of potential Future Agreements, the administrators may need to enter into agreements in those categories as the trading of the regional business continues and as the completion of the further sale process approaches. Given the different types of agreements which are relevant to the regional business to allow it to continue to operate, it would be highly inefficient and impractical - in a way that may imperil the continuing trading of the regional business or impose substantial additional cost in the administrations - if the administrators were required to return to Court to seek such orders limiting their personal liability on each occasion of a new agreement between now and the conclusion of the administrations. I accept that each of the categories of Future Agreements is of a kind that is important to the day-to-day operations of a large and complex operation. If entered into, such agreements would enable the regional business to continue to trade for the benefit of the creditors of the Rex Companies. This brings the Future Agreements within a recognised class of case in which orders limiting the administrators' personal liability are appropriate: see Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717; 144 ACSR 347 at [91] per Middleton J (In re Virgin).
9. Making a forward-looking order of the kind sought is an efficient and cost-effective way in which the administrators can retain and continue to utilise the assets and services necessary for the operation of the regional business without having to make multiple applications to the Court. That is consistent with the approach taken in In re Virgin at [105(3)].
10. Fifthly, and by way of summary, there is no relevant prejudice to any of the counterparties to the Current Agreements, the RAL Contracts or the Future Agreements in circumstances where the counterparties to the Current Agreements have already agreed to the inclusion of limited recourse and limited liability provisions and, in the case of the RAL Contracts and the Future Agreements, the counterparties are free to decline to enter into them or negotiate their terms with the administrators. Although there might be thought to be some potential prejudice to those counterparties because they are not then able to rely on the default position under Pt 5.3A of the Corporations Act (viz, that the administrators have unlimited personal liability for debts incurred for goods or services), the fact is that the administrators would be unlikely to proceed with those agreements if their personal liability is not limited. That is similar to the position that was accepted in Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 472 at [53]- [54] per Markovic J.
11. Sixthly, the administrators have been unable to forecast an accurate valuation of the regional business due to the complexities of the Rex Companies, the scale of the regional business, and the fact that the business improvement strategy is ongoing. As a result, the administrators do not have any certainty that the assets of the Rex Companies will be sufficient to fully indemnify them for the personal liability they would have under the Current Agreements, the novated RAL Contracts and the Future Agreements in the absence of the orders sought. This heightens the administrators' potential personal exposure and increases the prospect that the administrators will decline to cause the Rex Companies to continue performing, or enter into, the agreements in question. This uncertainty weighs further in favour of the orders sought.
12. Seventhly, in addition to the counterparties receiving specific advance notice of the orders that are sought limiting the administrators' liability, as mentioned, the administrators also seek an order granting liberty to any counterparty to a Current Agreement to apply to vary or discharge the orders limiting the administrators' personal liability under those agreements. General liberty is also afforded to any person demonstrating a sufficient interest to apply to vary or discharge any of the other orders limiting the administrators' personal liability. That form of order is customary and provides an additional layer of protection.

Should the IPSC s 90-15 direction be made?

1. I am also satisfied that the direction that the administrators seek in relation to entry into the novation deeds for the RAL Contracts should be made. That state of satisfaction arises from the following considerations.
2. First, the decision to novate the relevant agreements from Rex Airlines to Rex Holdings gives rise to questions of the reasonableness of the proposed exercise of the administrators' legal functions and duties and is therefore an appropriate subject for judicial direction. The proposed novations involve a departure from the pre-existing contractual arrangements and expose Rex Holdings to significant liabilities for which it is not presently primarily liable. While the administrators' view is that the inclusion of a preservation of pre-appointment rights clause will ensure that those counterparties do not suffer any prejudice, the administrators are entitled to seek the Court's approval of the reasonableness of that view by way of judicial direction.
3. Secondly, as to the appropriateness of the administrators' proposed course of action, the administrators submit that there is a clear and compelling rationale for the proposed novations. The metropolitan routes were identified as loss-making, those flights were grounded and the employment of 343 employees of the Rex Airlines was terminated very shortly after the commencement of the administration. It is for this reason that the further sale process is focused on the regional business and that Rex Airlines will not be part of any sale transaction. In view of the nature of the agreements in question, which I accept are critical to the continuation of the regional business, it is essential that those agreements remain on foot as part of that business and that any potential purchaser of the regional business will have the benefit of them. The proposed novations achieve that outcome, which is in the interests of maximising the return from the assets of the Rex Companies as a whole.
4. Thirdly, in addition to the inclusion of the preservation of the pre-appointment rights clause, I am satisfied that the novations will not prejudice the counterparties to the existing contracts to the extent they are creditors of Rex Airlines, as the RAL Contracts do not directly generate revenue for Rex Airlines. There is therefore no prospect that the novations will diminish the assets available to Rex Airlines' creditors. Instead, I am satisfied that the novations will likely preserve the value of Rex Airlines by removing the ongoing liabilities payable under the existing agreements.

1. Some of the evidence relied on by the administrators in support of their application is commercially confidential in the sense that if it was available publicly that may jeopardise the competitiveness of the Rex Companies' business or it may jeopardise the integrity and success of the further sale process. As is customary in circumstances such as this, I am satisfied that those parts of the evidence identified by the administrators as having that character of confidentiality should be suppressed - failure to do so would prejudice the proper administration of justice by placing an unjustified obstacle in the path of administrators seeking relief from the Court in circumstances similar to the present and it would potentially jeopardise the further sale process to the prejudice of creditors. I am therefore satisfied that order should be made under s 37AF(1)(b)(i) on the ground identified in s 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth).
2. Further, as mentioned, the orders sought by the administrators provide for any party showing sufficient interest to apply to vary the orders, including the suppression orders. The result is that if there is someone with sufficient interest who wishes to contend that the suppression orders are unnecessary or too broad, the door is open to them to advance such a case.
3. In the circumstances, I am satisfied that the suppression orders as sought should be made.

I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.

REX INVESTMENT HOLDINGS PTY LTD (ADMINISTRATORS APPOINTED)

REGIONAL EXPRESS PTY LTD (ADMINISTRATORS APPOINTED)