If I remember rightly Railtrack did not go bust, Stephen Byers, Transport Minister at the time, placed Railtrack into liquidation, initially without compensation until the law stepped in and eventually a figure for the Railtrack assets was agreed.
Do you mean administration or liquidation?
The reason why Byers put Railtrack into administration was that Railtrack went cap in hand to the government for cash to undertake the project or projects requested by the then Labour Government and as provided for in the rail privatisation act of parliament and patience was lost particularly as the abovementioned dividend was announced only days earlier.
They were indeed undertaking projects requested by the government, but as I recall it they were headed to be so far over budget that they company would have gone bust without extra resource. The reason for being over budget is they they had not thought through what work they would need to do to provide the additional capacity required to achieve the outputs they had promised to deliver.
They therefore requested a massive increase in funding which as you say was unfortunately at the same time they declared a dividend, but also at a time when following the Hatfield disaster they were not only not maintaining the railway in a safe manner but did not seem to have the competent management to put it right (remember Johnson Cox's decision to shut down the
WCML▸ completely to check the track, when an experienced track engineer would have been able to propose selected speed restrictions). Whether they would have got the extra resource had they not declared a dividend it is impossible to say, but I can see why government lost patience with railtrack at that point.
