PracticeAccounting FirmsByers risks E&Y challenge

Byers risks E&Y challenge

Railtrack administrator Ernst & Young believes a way remains open to challenge any final decision on the future of the failed infrastructure company by transport secretary Stephen Byers

Amid claims the administrator was powerless to put forward the best bid for the failed company, E&Y said it could return to court if it believed the secretary of state’s decision did not best serve interests of creditors and shareholders. An E&Y spokeperson said: ‘The administrator is appointed by the court, and could therefore seek directions from the court.’

E&Y said it would put forward all ‘credible’ bids for the company, but that the final decision rested with the secretary of state.

But the firm said it had a duty to indicate which bid was best for shareholders and creditors. The news emerged as the heat was turned up on E&Y with threat of further legal action, this time from Railtrack itself.

Railtrack Group said it could sue the administrator if it disagreed with the valuation of the assets of Railtrack plc, the subsidiary that owns the railway assets and infrastructure.

A spokesperson for the failed railway infrastructure company confirmed legal action against the administrator was one of a number of actions it was considering. ‘But this won’t happen until the company has been valued,’ she said.

But doubts have been raised over the quality of Railtrack’s asset register. E&Y already faces a threat of legal action over its original involvement in the flotation of the company from Class Law, the class action legal specialist that has launched an action group for Railtrack investors.

An E&Y spokesperson declined to comment on the specific legal threats. WestLB, the German bank that is putting together a so-called collaborative bid for the company, has already complained there was no level playing field for outside bidders.

Byers, who will make the final decision on the future of Railtrack, has said his preferred option was for a not-for-profit trust to own the rail infrastructure.

Links

E&Y ‘powerless’ over Railtrack bids

Ex-Tory minister slams Railtrack saga

For & Against: Putting Railtrack into receivership

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