Byers threat propels class action
Two of the three class groups seeking compensation following the Railtrack administration are on a parallel course for action in the wake of solicitor rail regulator Tom Winsor's intervention last week.Mr Winsor - formerly a partner with City firm Denton Wilde Sapte - told a House of Commons committee that transport secretary Stephen Byers said he would use emergency legislation to prevent any funding review which could save Railtrack.
Mr Byers denies this was a threat.The warning came in spite of the fact the regulator's independence from the government is guaranteed.The three organisations taking class actions after the administration were galvanised by the development.The Railtrack Shareholders Action Group (RSAG) - which largely represents institutional shareholders, and which recently shifted from using City firm Allen & Overy to Lovells over a potential conflict issue - appears to have consolidated its links with the group run by London firm Edwin Coe - making an Internet link between the pair's Web sites.Solicitor Graham Proudfoot, head of legal at fund manager Invesco, and a spokesman for the RSAG, said the government was only empowered to put Railtrack into administration in certain limited circumstances where the railway would otherwise have gone insolvent.He said there was no evidence that had an administration not been called, the rail network would not have continued to function.Mr Proudfoot said: 'What matters is whether this was rightly and legally done.
The government cannot plead that the end justifies the means.'He said Edwin Coe's class group claims 'more closely parallel ours' than Class Law's, suggesting the two groups are less likely to rely on negligence in the preparation of the original Railtrack prospectus than Class Law, and more likely to use irregularity in the procedure of the administration in seeking recompense.He said this was because many of the two class groups member shareholders did not buy their shares at the time Railtrack floated.Meanwhile, Stephen Alexander, the solicitor who heads Class Law, insisted that all three groups were still working together.He added that action might be imminent from Class Law, which last week asked Railtrack administrator Ernst & Young to clarify how much funding was available to Railtrack when the administrator was appointed, suggesting that the government may have engineered a 'short-term liquidity position' to justify the administration.Jeremy Fleming
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