Background
Rex Airlines Pty Ltd was placed into liquidation by a resolution of creditors on 11 November 2025, following a period of voluntary administration. Samuel Freeman and Adam Nikitins (along with the since-retired Justin Walsh) were appointed joint and several liquidators. Eight related companies in the Rex group — including Regional Express Holdings Ltd, Air Partners Pty Ltd, Rex Investment Holdings Pty Ltd, and Regional Express Pty Ltd — instead entered into a deed of company arrangement (DOCA). In December 2025, the court granted leave under s 444GA of the Corporations Act 2001 (Cth) for shares in the group to be transferred to Air T Rex Acquisition Inc, effectuating the DOCA and returning those entities to normal administration. Rex Airlines itself remained in liquidation.
The principal assets of Rex Airlines identified by the liquidators were rotables, tooling, and spare parts for Boeing 737-type aircraft, all subject to Commonwealth security. During the administration, the then-administrators had entered into a consignment agreement dated 28 August 2024 with C&L Aerospace LLC (C&L), under which C&L agreed to market and sell the surplus parts on commission while Rex Airlines retained title until sale. The agreement was extended by successive side letters, and because each post-liquidation extension was for less than three months, court approval under s 477(2B) of the Corporations Act was not previously required.
By the time the most recent extension expired on 5 March 2026, not all consignment assets had been sold. The liquidators sought court approval under s 477(2B) for a further extension — up to two years or until all assets are sold, whichever is sooner — because that term would exceed the three-month threshold that triggers the statutory approval requirement. The application also sought housekeeping orders removing the DOCA companies as plaintiffs (as they were no longer in external administration) and removing Mr Walsh as a party following his retirement.
The Court’s Holding
Stewart J granted all relief sought. On the procedural matters, the court ordered under r 9.08 of the Federal Court Rules 2011 (Cth) that the second to fifth plaintiffs (the former DOCA companies) be removed from the proceeding, that Justin Walsh be removed as a party, and that the first plaintiffs be renamed to reflect the two remaining liquidators. These orders were uncontroversial given the changed administration status of those entities and Mr Walsh’s retirement.
On the substantive application, Stewart J approved the extended consignment agreement pursuant to s 477(2B) of the Corporations Act, being satisfied it was in the best interests of Rex Airlines’ creditors and would advance the objectives of Pt 5.4B of the Act. The court accepted the liquidators’ evidence that C&L’s established marketing channels, industry relationships, and specialist expertise in Boeing 737 parts were essential to maximising recoveries; terminating the arrangement would force relocation of assets at significant additional shipping and stocktaking cost and would likely result in lower realisations. No viable alternative was identified. No creditor opposed the application.
Consistent with the approach taken in Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 571, the court also ordered the liquidators to notify creditors of the orders within one business day, and granted liberty to any person with a sufficient interest to apply to vary or discharge the approval on two business days’ notice. The costs of the application were ordered to be treated as costs and expenses of the liquidation.
Key Takeaways
- Court approval under s 477(2B) of the Corporations Act 2001 is required where a liquidator wishes to enter into (or extend) an agreement whose term or performance obligations may extend beyond three months — even where an earlier version of the same agreement predated the liquidation and was originally entered into lawfully by administrators.
- Approval will be granted where the liquidators demonstrate the arrangement is in creditors’ best interests: here, the consignment agreement provided specialist expertise and marketing infrastructure that could not be replicated quickly, and termination would have increased costs and reduced recoveries.
- Post-approval notification to creditors and a liberty-to-apply mechanism have become customary in s 477(2B) applications in the Federal Court, following the Virgin Australia precedent, providing a safeguard without requiring pre-approval creditor consent.
- Where related companies in a group exit external administration (e.g., via a completed DOCA), they should be removed as parties to ongoing insolvency proceedings, and retiring officeholders should likewise be removed — both achievable by the court under r 9.08 of the Federal Court Rules.
Why It Matters
This decision illustrates how the s 477(2B) approval mechanism functions in practice during complex group insolvencies with ongoing asset-realisation programs. Liquidators of airlines and other asset-heavy businesses frequently rely on specialist third-party consignors or remarketing agents whose value lies in accumulated market relationships — relationships that cannot simply be transferred to a substitute on short notice. The judgment confirms that courts will look to the commercial reality of the realisation process, including the cost and feasibility of alternatives, when assessing whether a long-term agreement benefits creditors.
The case also provides a practical example of procedural tidying in group insolvencies: as related entities complete their restructuring and return to ordinary operations, courts will readily remove them from ongoing liquidation proceedings to keep the record accurate and reduce unnecessary complexity. Taken together, the orders reflect the Federal Court’s pragmatic, creditor-focused approach to supervising complex liquidations in Australia’s National Practice Area for Corporations and Corporate Insolvency.