The firm admitted a £2bn overspend, but insists it will be ‘business as usual’, although LU managing director Tim O’Toole admitted work on station upgrades may be delayed until another owner is found.

In the interim, London Underground’s parent body Transport for London will fund the ongoing tube line upgrades. The troubled consortium sought an order for £1bn of public funding at the end of June to plug a funding gap after spending on network maintenance spiralled out of control. After a comparative review, LU public partnership arbiter Chris Bolt offered Metronet £121m, leaving the firm unable to meet its running costs.

The firm appointed Ernst & Young to administrate following what it admitted had been weeks of discussions.

Metronet spokesperson Paul Emberly previously told Credit Today it recognised it had not been as efficient as it could have been with some station upgrades, although it asserted LU’s expectations had been ill-defined from the start. According to a BBC report, Metronet projected similar problems and an overspend of up to £2bn by 2010 for the next train operator.

Metronet is responsible for the maintenance and renewal of the Bakerloo, Central, Victoria, Waterloo & City lines (BCV) and Circle, District, Metropolitan, Hammersmith & City and East London lines (SSL).

All contract staff salaries and suppliers will be paid for approved invoices at usual rates up to the date of administration.

Directors and staff are working closely with the PPP Administrator and London Underground to ensure that the infrastructure it is responsible for is safely maintained, and to ensure the continued safe and reliable operation of London Underground services.

Direct third party creditors will be paid their arrears of approved invoices for work done or goods delivered that are outstanding as at the date of appointment, in the normal payment terms. The PPP Administrators will be having separate conversations with the shareholder companies and their subsidiaries and affiliates in relation to their arrangements.

Metronet’s five shareholders were regularly criticised for awarding maintenance contracts back to themselves, include engineering firm Atkins, Bombadier, Thames Water, EDF and Balfour Beatty.