Judge Blocks Jet Midwest’s Lawsuit Against Rex
A New South Wales Supreme Court judge has blocked U.S.-based MRO company Jet Midwest’s attempt to sue Australia’s Regional Express (Rex) for $7.2 million. Jet Midwest alleged that Rex took four Saab turboprop aircraft from Arizona’s Kingman Airport in 2020 without paying in full, stripping the planes for parts and selling the remaining airframes as scrap. The case, Jet Midwest, Inc. v Regional Express Holdings Limited (case no: 2024/00264848), was dismissed under Australia’s Corporations Act.
Background of the Legal Dispute
Jet Midwest claims that Rex removed the turboprops from Kingman Airport, repurposing parts for its fleet while failing to honor the full payment. However, in July, Rex filed for voluntary administration, citing debts around AUD500 million (USD329 million). Justice James Stevenson referenced section 440D of the Corporations Act, which prevents legal action against a company in administration unless granted permission by the court or the company’s administrator.
Justice Stevenson highlighted that the act prohibits asset owners from reclaiming their property from a company in administration. This ruling blocks Jet Midwest’s attempt to pursue the matter further without court or administrator consent.
Asset Recovery and Rex’s Financial Administration
As Rex remains under administration, Ernst & Young (EY), the appointed administrators, have found parts of Jet Midwest’s aircraft, including propeller blades, stored in an Indonesian facility. Justice Stevenson noted that EY has agreed to make these parts available for immediate retrieval by Jet Midwest.
Ernst & Young continues efforts to find a buyer for Rex, which primarily operates a fleet of Saab 340B and Saab 340B Plus aircraft for regional Australian routes. In a bid to stabilize its operations, Rex abandoned its Boeing 737-800 services, focusing instead on core regional routes. Reports indicate that Rex’s aging fleet—averaging 33.4 years for the Saab 340Bs and 28.4 years for the Saab 340B Plus models—has made the sale challenging. However, EY has emphasized that despite the aircraft’s age, Rex’s fleet has relatively low hours and has been meticulously maintained.
Sale Prospects for Rex
EY is actively seeking a buyer, valuing Rex at around AUD300 million (USD197.1 million). Although the aging fleet may deter potential buyers, Rex’s established network of regional routes and its reputation for consistent maintenance standards add appeal. As the sale process continues, Rex’s administrators remain focused on maximizing the airline’s value and securing a future for its regional services across Australia.
Implications for Jet Midwest
The decision to deny Jet Midwest’s lawsuit underscores the challenges of recovering assets or payments from companies in administration under Australian law. Section 440D aims to protect companies in financial distress from legal claims while they reorganize or seek buyers, allowing administrators to manage asset allocation and potential liabilities.
Jet Midwest may still recover parts through Ernst & Young, but further litigation is on hold. As Rex’s administrators focus on selling the airline, Jet Midwest’s claims remain sidelined, with little recourse for pursuing additional compensation.
The outcome of Rex’s sale will likely impact how creditors, including Jet Midwest, ultimately recover outstanding amounts, highlighting the complexities of navigating legal claims against companies in administration.
Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com