Son of Railtrack delayed
There will be no successor to Railtrack in place within the next six months nor will any private money be raised to fund its new structure, the beleaguered rail company's administrators admitted this afternoon.
Facing a grilling today by MPs on the powerful Commons transport select committee Alan Bloom, Railtrack’s administrator from Ernst & Young, said it was ‘unlikely’ the company would be out of administration by April 2002.
‘That looks unlikely. In order to achieve the transfer a lot has to be segmented,’ said Bloom in response to the select committee’s probes over whether administration can be finalised within the average three to six months.
He added: ‘I do not see the prospect of any private money being raised during administration.’
Despite the government’s preferred option of seeing Railtrack become a not-for- profit body, Bloom said the administrators had to view the possibility of the rail network operator continuing as a money-making business.
He said: ‘Our duty is to develop interest in the company as a going concern. But the ultimate decision lies with the secretary of state.’
However Steve Marshall, Railtrack chief executive, told MPs: ‘If administration is not brought to an end and the government does not decide very quickly, then it will severely impair the ability of Railtrack to run the business.’
Bloom was not able to offer any estimates of how much the administration work would cost. But he told the committee a person of his seniority would charge £450 per hour for his services and £250 for that of his team. All work is done on an hours and rates basis.
Bloom, head of insolvency at E&Y, said his team is working closely with Railtrack’s board. Marshall and the existing management team deal with the day-to-day running of the business, while the E&Y team deals with issues that arise from administration.
Voicing concerns over the company’s ability to retain and recruit employees, Marshall launched a scathing attack on the government’s withdrawal of support. He said: ‘I’m desperately concerned that as sketchy as the government’s proposals are, they are ill-thought out.’
To add further problems to an already complex situation, reports suggest that Virgin Trains will be looking for compensation from Railtrack. Bloom said he had scheduled a meeting with Virgin, but he was unsure of the agenda.
Recent doubts over the company’s asset register were highlighted at the committee meeting today when Marshall was forced to admit that a full asset register will not be available until the end of the year.
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