Britain's Railtrack facing closure

Railtrack was accused of "lamentable failure" after the Paddington rail crash that killed 31 people

LONDON, England -- The British government says it plans to dissolve Railtrack -- the company that maintains Britain's railway infrastructure.

The transport department said Transport Secretary Stephen Byers would ask the High Court on Sunday to place the company into the hands of administrators.

A brief statement from the Transport Department said: "Later today Transport Secretary Stephen Byers will petition the High Court to place Railtrack plc into railway administration.

"This follows his decision on Friday to refuse a request from the company for additional funding. The Government has been in discussion with the company since July about its financial position."

The move means Railtrack shares are likely to be suspended when the London Stock Exchange opens on Monday.

A report in the Sunday Times newspaper said the firm was near bankruptcy.

In the 1990s, the Conservative Party government divided Britain's rail services between 25 private operators, with Railtrack given control of tracks, signals and stations in 1994. Railtrack was privatised in 1996.

The company has been blamed for worsening services on Britain's ageing rail network. A series of crashes created major service disruptions and delays.

Railtrack also is facing a £5 billion ($7.4 billion) bill for upgrading tracks on the west coast London-to-Glasgow line.

An official report in June accused the company of "lamentable failure" and "institutional paralysis" for not fixing a difficult-to-see signal that was blamed for a crash of two passenger trains that killed 31 people near London's Paddington Station in October 1999.

An October 2000 crash at Hatfield, north of London, that killed four people was blamed on a cracked rail. The discovery sparked a spate of emergency safety checks, rail-replacement work and speed restrictions that caused months of havoc for travelers.

Home Secretary David Blunkett said on Sunday that the Conservatives' piecemeal privatisation arrangements had "failed abysmally and it is now time to get them sorted out once and for all."

Once Railtrack goes into administration, the government could re-nationalise it by buying up its shares -- considered by analysts to be unlikely -- or set up a private company to take over from Railtrack.

The value of Railtrack shares has fallen from a peak of more than £17 late in 1998 to £2.8 on Friday.