The Australian Securities and Investments Commission has alleged four former Rex directors misled the market in statements claiming the board was confident of a strong financial result, months before handing down a $31.7 million operating loss.
In delivering his closing argument for two of the directors on Tuesday, barrister David Thomas SC argued the commission's case leaned heavily on evidence against the company rather than the board itself.
"I'm drawing attention to a notable and unexplained gap between the course of expert evidence against the company and the complete absence of it against my clients," he told the NSW Supreme Court.
On February 28, 2023, Rex released a statement to the market saying it was optimistic the company would post positive operating profits for the financial year, barring any external shocks.
The statement was not corrected until June 20, when Rex forecast a $35 million loss, with 10 days of the financial year remaining.
It ultimately recorded a $31.7 million operating loss for the 2023/24 year.
Former Rex executive chair Lim Kim Hai in May admitted ASIC's allegations against him.
The defence teams for the other former directors - one-time Nationals MP John Sharp AM, Lincoln Pan and Siddharth Khotkar - have argued the February statement was not intended to mislead and any financial predictions were difficult to make accurately.
"Whether it's unawareness or breach, there needs to be allowance under the scheme ... for mistakes or errors of judgment," said Mr Thomas, who represents Mr Pan and Mr Khotkar.
For its part, ASIC's legal team claimed the board ought to have known Rex's legal position much earlier than by June 2023 and had breached their continuous disclosure obligations.
"Mr Lim in particular, but all of them, knew the position much, much earlier and ought to have taken steps to correct or withdraw the unreasonable guidance well before the middle of June," ASIC barrister Michael Borsky KC previously told the court.
Rex went into administration in July 2024 with more than $500 million in debt after an ill-fated expansion into Australia's competitive capital city routes.
It was purchased by US aviation group Air T via administrators EY in October 2025, with the deal finalised in December after the federal government had bought $50 million of the carrier's debt and provided a $80 million commercial loan to support the acquisition and keep regional routes running.
Rex is Australia's largest independent regional airline, flying to 53 destinations across the nation.
