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is this still a contract
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Author:  Stinky Pete [ Mon Feb 12, 2007 7:17 am ]
Post subject:  is this still a contract
Can someone let me know how a business contract with GNER and station taxis [York] can still exist in the form of a franchise, when GNER are bust and broke
Author:  captain cab [ Mon Feb 12, 2007 11:40 am ]
Post subject: 
I understand GNER has put a bid in for the East Coast franchise....the question of whether they get it back or not is open to debate, especially after the over optimistic bid that dropped them in the mire in the first place.

CC
Author:  Fae Fife [ Mon Feb 12, 2007 2:49 pm ]
Post subject:  Re: is this still a contract
Stinky Pete wrote:
Can someone let me know how a business contract with GNER and station taxis [York] can still exist in the form of a franchise, when GNER are bust and broke


I think the usual rule is that any contract would stand until the franchise actually ends or if GNER went into administration or receivership then the contract would continue to operate with the administrator or receiver.

Since I think GNER still operates the franchise then I don't think anything has changed?
Author:  captain cab [ Mon Feb 12, 2007 3:20 pm ]
Post subject: 
The following was on wilkopedia;

In May 2006, it was revealed that GNER's parent company Sea Containers was in financial difficulties, and was rumoured to be bordering on insolvency. Subsequent to this, questions were raised as to whether GNER could continue operating should its parent company cease trading. The company rejected this assertion, stating that its lines of credit and financial activities were "ring-fenced" away from Sea Containers, and therefore a cessation of services for this reason was impossible. It did not however stop a furore of speculation from rival TOC's (principally Virgin Trains and First Group) that they would be keen to rebid for the ECML franchise if it were put back out to tender. In July 2006, rumours then began circulating that Sea Containers would be prepared to sell GNER in an effort to stave off resorting to Chapter 11 proceedings to secure itself from its creditors [4].


The fall of Sea Containers Ltd.On 27 July 2006 the High Court rejected GNER's judicial review over the Office of Rail Regulation's decision to allow Grand Central Railway to operate trains along part of the East Coast Main Line [5]. GNER had made its application partly on the basis that 'open access' train operators (like Hull Trains) are not required to meet the same fixed costs for accessing Network Rail's infrastructure as those train operating companies running services under a contract or 'franchise' with the UK Department for Transport. GNER's case failed principally because the High Court determined that not only did European law permit the Rail Regulator to establish a charging regime for open access operators which was different from the one which applies to franchised operators (such as GNER) - in this case not imposing a fixed charge on open access operators - but that if he had not done so, he would have been acting illegally because of the very different conditions under which open access operators and franchised operators get access to the network. The High Court (Mr Justice Sullivan) refused GNER permission to appeal, and GNER decided not to ask the Court of Appeal to take the case.

On 25 July 2006, two days before the public judgment in the above action, GNER announced that Christopher Garnett, the company's chief executive officer, was to step down, having occupied that position since Sea Containers, GNER's parent company, won the first InterCity East Coast franchise (see above). Amid growing industry speculation that Sea Containers was working towards a "financial restructuring", that company's President and Chief Executive Bob MacKenzie was named as Garnett's successor [6]. During and following these events, Sea Container's serious debt issues fuelled speculation about GNER's future ownership and operation, as discussed in the general and rail industry press [7] [8].

The problems have been further fuelled by GNER's poor profitability, which has been linked to the company's overbidding for the ECML franchise coupled to what have proved to be crippling subsidy repayments to the Government (see above). The company blames the effects of the 7/7 terrorist attacks, increased electricity prices and increased competition from low cost airlines for the decline in passenger numbers. It also faces a growing challenge from the revitalised West Coast services operated by Virgin. The company has attempted to address the problem by encouraging internet sales by waiving booking fees, cutting staff numbers and raising fares and car parking charges where the market can bear it. In September 2006, the GNER's ex chief Christopher Garnett in a press interview [9] hinted at a bleak future for GNER and the franchising system - claiming that the trend among TOCs to overbid for the renewal of franchises would result in a financially unsustainable railway.

On 16 October, Sea Containers confirmed that it was filing for Chapter 11 bankruptcy protection, therefore allowing it to continue trading should insolvency occur. Two days later, Sea Containers' chief Bob MacKenzie announced that the company was threatening to withdraw from the GNER franchise by May 2007 if the Government did not renegotiate the franchise terms.

By 27 November 2006 the Department of Transport announced that it would withdraw the franchise from GNER, largely on the basis of Sea Containers' financial difficulties and its uncertain future. However, the company has been allowed to continue running the ECML franchise on a fixed management contract basis for up to 24 months, until a new operator is found. First Group, National Express Group and Virgin Trains will almost certainly be the front runners for the re-let franchise, while GNER have indicated that they may re-bid.

Bids for the InterCity East Coast franchise were submitted to the Department for Transport on the 15 January 2007 with details of the bids expected to be made public in mid-February.
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