Back on track
12 August 2002
30 July 2013
27 September 2013
9 April 2014
24 February 2014
DIFC court determines it has inherent jurisdiction to stay proceedings in favour of DIAC arbitration
21 January 2014
It is a measure of Alan Bloom's implacable calm under pressure that it is almost 12 months into his job as Railtrack administrator that the Ernst & Young (E&Y) partner has yet to break the routine of his regular early morning workout.
"If you don't go first thing in the morning you've lost the chance, because the day just takes over," reckons Bloom, who heads E&Y's corporate restructuring practice. So the self-confessed gym junkie is in work at 6am and, together with "some other mad fools", he has his pre-breakfast workout at a "Rocky-type gym" around the corner from E&Y's HQ near Waterloo an hour later. The fate of the nation's rail infrastructure, the jobs of its 11,000 workers and the careers of ministers might be at stake, but such pressures have yet to break the dapper accountant's stride.
Of course, instilling order and routine is what good administrators do. This is how Bloom describes his number one objective on taking the job last summer: "Creating calm at a time when there could have been real crisis. One of the things we're proud of is that panic didn't prevail and we were able to keep things very calm."
Bloom has weathered many a corporate storm - for example, he steered Barings Bank through its terminal breakdown and breathed life into a crippled Canary Wharf. Last month, Railtrack concluded the sale of its core railways business for £500m, handing over control to the new state-backed, not-for-profit Network Rail. There are a number of issues, mainly procedural, before the company can exit administration, but it is due to come out of administration next month. According to Bloom, everything is running to time. Perhaps Railtrack should get him to run the trains when he has finished.
When former Transport Secretary Stephen Byers snatched Railtrack back into public ownership last year, it was amid general chaos and fierce recriminations from the shareholders. Bloom was already on board when E&Y was approached to advise on the possible fate of the beleaguered company as early as last August. "It was the day after I got back from holiday and we were merely told that it needed advice on the hypothetical practicalities of administration," he recalls.
E&Y worked on the theory for six weeks prior to the official announcement to pull the plug. Was Bloom surprised when it happened? "One assumes at the back of the mind that something will happen - the problem will be sorted out and it won't come to administration, especially as you know that other options are being explored," he answers. "So yes, it was a bit of a surprise, but we were ready for it."
On 7 October last year, Bloom was appointed administrator alongside fellow partners Chris Hill, Scott Martin and Mike Rollings. Inevitably - but unwillingly - Bloom was caught up in the political controversy that enveloped the early days of the administration. The Independent on Sunday ran a story that said Bloom had been tipped the wink to kick-start administration plans on 11 September. According to the paper, Bloom received a call at the time Jo Moore sent her now infamous email. It is a point that Bloom has subsequently denied.
"We weren't talking to the politicians at all then, and even when it went into administration we weren't having regular meetings with the politicians," he insists. It is a curious aspect of railway administration, Bloom says, that it is appointed by the Government but its duty is to the creditors and the shareholders
"We tried not be in the spotlight," he says, "but we recognised that for two or three weeks that was going to be unavoidable." As he points out - possibly with some understatement - it is a "very closely observed industry. Everyone has a view and every step you take and everything you do is watched."
Christmas was to be the watershed for Railtrack. Bloom explains: "Everyone was saying people would give us the benefit of the doubt until then. What we didn't want was employees starting to think too much over their break and coming back believing that their careers could be pursued better elsewhere." An uneventful period after the administration order was much helped by, as he puts it, the fact that there were no major accidents on the line during that time. The "biggest and best decision" at that time, according to Bloom, was appointing John Armitt as chief executive and replacing Steve Marshall, who resigned the day Railtrack went into administration, leaving the struggling company rudderless.
Bloom is particularly irked at press reports that the administration costs have been running in the region of £1m a day. "I'm quite happy to use this as an opportunity to dispel that myth," he says. He reckons that the cost of his 40-strong team, plus external advisers (such as Deutsche Bank, Slaughter and May and Simmons & Simmons), would not be a fraction of that. "I'm not suggesting for a moment that these costs aren't substantial, but if you add it all up it wouldn't be £1m a week."
Bloom instructed Slaughters and retained Simmons (Railtrack's lawyers since flotation) where they were not conflicted out. The accountant has worked with Slaughters on a number of high-profile insolvencies since 1990, not least on Barings. "The firm gets things done; it's unfussy and professional," he says.
What makes a good insolvency law practice? "We're looking for solution-orientated lawyers, not people who are just going to present us with problems when there are enough of those in assignments like this," Bloom says. "We want lawyers who are prepared to break new ground when we have to break new ground."
Bloom looks for breadth of practice and not just narrow insolvency law expertise. "You're talking about the whole range of issues in work like this - public law, competition, private finance, corporate, tax, property - and they have to have real strength in all of these areas," he explains. "Outside the magic circle, he reckons that there are "probably four or five firms" that could handle a Railtrack-style insolvency.
And where do lawyers get it wrong? When they turn up "en masse, or when it's not immediately obvious why they're there", he says, or "when they equivocate too much". Bloom's other pet hates include a tendency on the part of some lawyers to "draft to death".
If 12 months to save a nation's rail infrastructure sounds eye-wateringly tight, Bloom reckons it was nothing compared with the aftermath of the spectacular collapse of Barings Bank, brought down by rogue trader Nick Leeson. "We were involved on a Saturday morning, went into administration on the Sunday, and the banking licence was withdrawn immediately," he recalls. "We knew this business with 6,000 employees couldn't survive for more than a week or 10 days unless we could find someone to buy it." In the end, Dutch bank ING picked up the merchant bank for £1. "Barings was in every time zone, so we worked around the clock and our team didn't sleep for two weeks," Bloom adds.
Then there was the Olympia & York Canary Wharf project. If ever there was an example of a successful administration, then the former white elephant, which collapsed under a mountain of debt in the early 1990s, was it. "I don't think anyone would ever have anticipated quite the meteoric success it has had," says Bloom. "We were breaking new ground because few businesses have been taken out of administration that way. Nothing of that order has even been done before and not many since."
How does Bloom define success for the Railtrack administration? The first aim, he says, is to manage the railway network and keep it running in an orderly way - and "so far, yes, we have". The second objective is to transfer it into "good and safe hands". He adds: "We would say at the moment that we're moving in the right direction."
Bloom's final marker is whether the stakeholders, such as the staff, shareholders and directors, feel that "we've done the most professional job we can in the circumstances". He shouldn't have long to wait for their judgement.