Railways Act 2005

Railways Act 2005

2005 CHAPTER 14

Commentary on Sections and Schedules

Part 5: Further Miscellaneous Provisions

Railway administration orders for companies providing Scottish services

Section 49: Functions of Scottish Ministers in relation to railway administrationSection 50: Assistance by Scottish Ministers for companies in railway administration

166. The provision of Sections 59 to 65 of the 1993 Act deal with Railways Administration - a particular system of insolvency for the rail industry based upon the Insolvency Act 1986 but with different purposes, in that it is primarily focused on ensuring that railway services are maintained.

167. Sections 49 and 50 provide for the Scottish Ministers to be able to exercise functions in relation to the railways administration of a franchise operator in relation to a Scottish franchise agreement. They provide the Ministers with power to apply for a railways administration order in respect of such an operator. The Scottish Ministers must also be notified in advance of any proposals to obtain a winding up order, a voluntary winding up resolution or an administration order in respect of a Scottish protected railway company. This advance notification allows time for the Scottish Ministers to apply, if they consider it appropriate to do so, for a railways administration order in respect of that company. If a railways administration order is made, this effectively blocks the proposal for the other procedure from progressing. In addition, the Scottish Ministers must be notified in advance of any proposals by any person to enforce their security over the property of a Scottish protected railway company. This advance notice again allows time for the Scottish Ministers to apply, if they consider it appropriate to do so, for a railways administration order in respect of the company.

168. They also give the Ministers power to provide funding or guarantees in order to achieve the purposes of the railways administration order, and to indemnify the railways administrator appointed under the railways administration order (and persons connected with him). They may set such conditions on the financial assistance they provide as they see fit.