Rex administrator wins reprieve in ‘stolen aircraft’ lawsuit (original) (raw)

A Rex hangar in Wagga Wagga. (Image: Michael McCormack MP)

Rex’s administrator has been given a reprieve in proceedings brought by an American aircraft maintenance company over allegedly stolen Saab 340s.

With EY Australia still grappling with the recapitalisation and sale of assets, Justice James Stevenson of the NSW Supreme Court was reluctant to allow plaintiff Jet Midwest to proceed with a claim for damages upwards of US7.2million(US7.2 million (US7.2million(11 million).

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The airline maintenance company based in Kansas City, Missouri alleged Rex stole four Saab 340s from an Arizona storage facility without permission after a sale contract between the two fell apart.

Although Rex paid 10 per cent of the $US2 million sale price, its failure to pay the rest led to the termination of the contract in 2020.

Three years later, Jet Midwest discovered the aircraft had already been released from storage into Rex’s possession. By then, the aircraft had been stripped for parts.

The Supreme Court proceedings were commenced in July 2024, but Rex entered administration two weeks later.

Jet Midwest asked the court for leave to proceed with its matter during the administration period, to join Rex Investment as a defendant, and to claim delivery of the allegedly stolen components.

However, Justice Stevenson said it would not be appropriate to impose the “distraction” of the proceedings – including the costs and time it would require – on the administrator.

In submissions to the court, the administrator said it identified some components for “immediate collection” by Jet Midwest.

For any other components, the administrator added it was also prepared to seek leave from the court to either return or dispose of property and account to Jet Midwest for any sale proceeds.

“The alternative course advanced by Jet Midwest is lengthy and costly litigation to achieve effectively the same outcome.

“On any view, this proceeding will be substantial and complex if allowed to proceed; and the requirement for the administrators to be involved in such litigation will be an unnecessary and costly distraction from their important task of completing the sale process and effectuating any deed of company arrangement … to implement any sale transaction,” the administrator submitted.

For the first time in the proceedings, Jet Midwest also sought leave to secure the 10 per cent deposit, currently being held in escrow.

Justice Stevenson agreed with the administrator this would distract it from its task, “by being required to search for documents, obtain advice and form a position on these matters now when they can be addressed in any deed administration or liquidation”.

Jet Midwest accepted there was no particular urgency for this claim, especially given it has already waited “some four years” before making any move on the deposit.