The Australian Securities and Investments Commission (ASIC) alleges that Regional Express Holdings (ASX:REX) knew the financial health of the company was deteriorating after making a profit projection months earlier, The Australian reported Thursday, citing court records.

In its application to the New South Wales Supreme Court, ASIC said Rex "did not have reasonable grounds" to project positive operating profits for the financial year 2023 in a guidance issued on Feb. 28 of the same year. The airline, which is in voluntary administration, reported a AU$30.4 million loss in the first half a further loss of AU$5.3 million in January.

ASIC also claims that former Executive Chair Lim Kim Hai and other directors delayed informing the market about the company's poor financial performance for months, despite receiving negative data on multiple occasions, The Australian reported.

ASIC alleges that Lim sought a AU$10 million emergency funding from Asian investor PAG in April 2023 amid the company's "critically low" cash reserves and "disappointingly and bewilderingly bad" domestic ticket sales.

Rex's administrators did not immediately respond to a request for comment from MT Newswires.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)