Former CEO and founder of Australian Reliance Andrew Donnelly has failed to overturn a court order freezing his assets.

Mr Donnelly and former Reliance CFO Kim Hanson are being sued by parent company Vantage Holdings over the alleged misuse of $5.17 million from a trust fund.

As insuranceNEWS.com.au has reported, the court action was instigated just days after the bulk of the Australian Reliance business was acquired by PSC Insurance Group for $31.57 million.

Mr Donnelly, a former West Coast Eagles AFL player, was hit by a freezing order, which he subsequently sought to have removed.

He told the WA Supreme Court the order prevented him from selling shares at the optimum time, and also scuppered discussions with a potential new employer.

However, Justice Peter Martino declined to lift it. He said there is “a strong arguable case” that Mr Donnelly “knowingly aided the dishonest misuse of trust monies”.

He acknowledged the money was not used for external purposes, but to make interest payments and pay trade creditors.

“However, it is my view that if this case is made out at trial it would still amount to involvement in serious dishonesty,” he said.

“I conclude… that the plaintiffs have established there is a real risk that, if not restrained, the first defendant will dispose of assets so as to make a judgement fruitless.”