Administrators allege company may have been trading while insolvent and question financial records

This article is more than 1 year old

This article is more than 1 year old

The current and former directors of collapsed budget flight booking company Bestjet have been referred to the Australian Securities and Investments Commission over possible breaches of the Corporations Act.

The company’s administrators, Pilot Partners, believe Robert McVicker, Rachel James, and her husband, Michael James, “may have breached their obligations to act in good faith and in the best interests of the company” in the lead-up to the company’s collapse.

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In an explosive report published on Wednesday, the administrators also allege the former Air Australia boss Michael James may have been a “shadow director” at Bestjet.

In its report, the administrators detail issues with Bestjet’s affairs, stating that it “may have been trading whilst insolvent from early December 2018” and that financial records were “largely incomplete” with “significant doubt” about their reliability.

Published by Asic on Wednesday, the report also states that computers and security equipment were removed from the company’s Brisbane office before administrators were able to review their contents.

The company’s joint administrator, Nigel Markey, said Queensland police had been notified of the removal of security equipment from the company’s Brisbane headquarters.

“It is currently unclear who removed this equipment from the company’s premises,” Markey wrote.

The report states investigations into Bestjet’s finances had proved “unnecessarily difficult”.

It states that both Rachel and Michael James had “failed to respond to our various enquires regarding the company’s affairs” and that the administrators had been unable to access many of the company’s records.

Bestjet’s collapse just days before Christmas had left travellers who booked flights through the company thousands of dollars out of pocket and desperate for answers.

Company records indicate there are 4,684 ordinary unsecured creditors lining up with claims estimated to be worth almost $10.8m.

The company was founded by Rachel James, the wife of former Air Australia owner Michael James, just weeks after the budget airline’s high-profile collapse in 2012.

Air Australia was almost $100m in debt when it went under, leaving thousands of travellers stranded overseas. Its collapse led to Michael James being disqualified from managing corporations for three years by Asic.

Guardian Australia has previously reported that Michael James was closely involved in the company’s day to day operations and, in its report, Pilot Partners state he may have been acting as a “shadow director” of the company.

It also reveals the administers have reported a number of potential breaches of the Corporations Act to Asic.

“Our investigations have revealed that the director, former director and de facto/shadow director may have breached their obligations to act in good faith and in the best interests of the company pursuant to section 180 and 181 of the act,” the report states.

Former head of failed Air Australia was involved with Bestjet before collapse Read more

“The administrators have completed and lodged with the Asic a report which outlines the offences that may have been committed. As previously advised, the administrators have also reported Mr and Ms James to Asic for failing to provide information in relation to the company’s affairs.”

McVicker, who took control of the company in November, has previously claimed he was forced to go into voluntary administration after he did not receive a promised $3.2m payment from the company’s former owners.

The money was apparently held by a related company Bestjet Singapore, which company records show was still held in Rachel James’ name. The administrators say that they have no control over the Singapore company.