Railtrack

Railtrack was a privately held company, which was owner and manager of the British railway network (ex- British Railways) since its Privatization in 1996 until in 2002. This company belonged to a group called “Railtrack Group plc”. It was sold the October 3rd 2002 with Network Rail, “non-profit-making” privately held company, and was renamed later “Network Rail Ltd Infrastructure”. The parent company of Railtrack was famous “RT Group” and setting in liquidation thereafter.

Railtrack was founded at the time of the Privatization British railroads and was placed on the stock market in London (London Stock Exchange) in 1996. Railtrack plc was put under control of the railway administration the October 7th 2001, pursuant to the law on privatization, and according to a decision of the Supreme court (High Court), by Stephen Byers, Minister for transport of the time. Network Rail was then created with the main aim to acquire the credit of Railtrack. This decision was well accommodated at the time by associations of users of the train to the the United Kingdom.

This company was severely criticized at the same time for its failure in the improvement of the railway infrastructures, and for the serious security issues which it met. The British government put the company under administrative control, considering that, considering its level of debt it could not economically remain viable like business firm without important and repeated public allocations. The legislation which governed it prohibited the sale of credit to pay the creditors.

The railway catastrophe of Hatfield involved a programme of repairing of totality of the British railway network, whose amount is estimated at approximately 580 million pounds sterling. It is that, inter alia, which pushed Railtrack to require subsidies of the government, subsidies which were partially used, in a debatable way, to pour dividends with the shareholders. It was the water drop which pushed the worker government of Tony Blair to put the company under the mode of administrative control.

In the beginning it was not envisaged any compensation for the shareholders. The government considered that the decision to place the company under this mode of control was valid and in conformity with the law on the privatization of the railroads.

The parent company of Railtrack, the group Railtrack Group continued to exist under the name of RT Group, and was put in friendly liquidation the October 18th 2002. The activity of Railtrack (including its debt of 7 billion pounds sterling) was sold in Network Rail for an amount of 500 million pounds sterling, and the various activities which it had created to try to take cover from losses generated by the management of the railway network were sold to various purchasers. A sum of 370 million pounds sterling, frozen at the time when Railtrack Group was put under legal administration, was assigned to the compensation for the shareholders of Railtrack to a total value of 70 pence approximately by action. The participation of the group in the new line London-Tunnel (Chanel Tunnel Rail Link) was also sold to recover funds.

The shareholders of Railtrack constituted two lobbies to obtain better compensations. According to a lawyer of the one of these groups, their strategy was to continue the government to have given false informations during the creation of Railtrack, at the time where John Major Prime Minister was conservative government. An increase with 260 pence by action of the offer of compensation is enough to convince the most important group of shareholders, the “ Railtrack Action Group ”, to give up the law-suits. The other group, the “ Railtrack Private Shareholders Action Group ” continued its action.

According to the Guardian of November 23rd, 2001, an additional amount of 3,5 billion pounds sterling would have been necessary to maintain the rail network British in operating condition, going up however disputed by the direction of Railtrack.

See too

• Network Rail | British railway System
• List of the managers of railway infrastructure
• List of the British companies