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Monday, 8 October, 2001, 11:28 GMT 12:28 UK
What Railtrack employees have been told
Railtrack headquarters
In this letter, Railtrack's newly-appointed administrator explains to its 11,000 employees what will happen now that the company has gone into liquidation.

On 7th October 2001 the High Court made a railway administration order in relation to Railtrack PLC (the "Company").

The application for a railway administration order was made by the Secretary of State for Transport pursuant to the Railways Act 1993.

Alan Bloom, Christopher Hill, Scott Martin and Michael Rollings of Ernst & Young LLP were appointed as joint special railway administrators of Railtrack PLC ("the Company").

The purpose of this note is to explain the purposes and effect of our appointment.


The Railways Act 1993 sets out the purposes for which a railway administration order is made which include the continuation of the rail network operations pending their transfer to a new entity.

Our key objective is business as usual and to achieve this we will require your support during this process

In order to achieve this HM Government has agreed to make loans available to the Company for the purposes of carrying on the operations.

Suppliers who are creditors of the Company and whose invoices are approved for payment in the normal way will continue to be paid.

Please see the statement to creditors and suppliers for further details in this regard.

The existing management structures remain in place.

For all practical purposes, day to day responsibility for running the Company rests with the Directors.

We will be working closely with management and do not envisage any material changes to procedures on a day-to-day basis.

Our key objective is business as usual and to achieve this we will require your support during this process.

Safety The safety of the railways will retain its priority after the making of the railway administration order.

Accordingly, the directors and management of Railtrack PLC remain responsible for compliance with the Railways (Safety Case) Regulations 2000 and all safety matters must be dealt with in the normal way.

Your employment

Our appointment as joint special railway administrators has no automatic effect on your contract of employment.

You continue to be employed by the Company and your pay and conditions are not affected by the railway administration order.

The making of the railway administration order itself will not give rise to redundancies

The making of the railway administration order itself will not give rise to redundancies.

With regards to the Employee Share Scheme, we are unable to comment at this stage what effect the railway administration order will have for shareholders in Railtrack Group PLC.

The financial consequences of today's actions for shareholders in Railtrack Group PLC will depend on the terms of any scheme proposed by the joint special railway administrators for the transfer of Railtrack PLC business and assets out of administration as a going concern.

We will keep you informed of any developments.

For the avoidance of doubt, we should stress that neither we personally nor our firm, Ernst & Young LLP, have:

  • Become your employer
  • Assumed any responsibility in relation to your contract of employment
  • Assumed any personal liability in respect of your contract of employment

As there are recognised trade unions with the Company representing your interests, meetings will be held with those representatives as soon as possible.

It is our understanding that the assets of the pension scheme are held in a separate company which is not affected by our appointment as special railway administrators.

During the period for which the railway administration order remains in force, we will continue to pay contributions to the pension scheme in the normal way.

Other matters

There will clearly be a large amount of media interest in the making of the railway administration order and we would ask that no employees speak to the press or media.

All enquiries of this nature should be referred to the Company's press office who can then liase with the joint special railway administrators' press office.

During the period for which the railway administration order remains in force, it is a legal requirement that all letters, invoices and other outgoing documents must state that the Company is in railway administration.

You can expect to receive further information regarding the implementation of this requirement shortly.

I am sure that you will all have questions arising from our appointment and I would ask that, in the first instance, these be forwarded to your local HR contact or Trade Union representative.

We will then be able to provide coordinated responses to common questions.

Finally, we would like to re-iterate that our key objective is to ensure business as normal during this process and would ask for all your support pending a transfer of the management of the rail network to a new entity.

We will keep you as fully informed of the situation as we are able as matters progresses.


Joint Special Railway Administrator

Transport Secretary Stephen Byers
"They failed to provide a good railway network"
George Muir of the Association of Train Operators
"The trains will run normally"
See also:

08 Oct 01 | Business
Rail users promised 'fresh start'
08 Oct 01 | Business
Railtrack in administration
05 Aug 01 | Business
Railtrack may axe managers
02 Aug 01 | Business
Railtrack operations chief axed
23 Jul 01 | Business
Railtrack funding under threat
24 May 01 | Business
Railtrack reports massive loss
07 Oct 01 | Business
Railtrack privatisation 'flawed'
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