Arms were twisted, but in the end Railtrack just couldn't convince the British Transport Secretary, Stephen Byers, to hand over any more money.
Last Sunday morning, the owner and operator of Britain's rail infrastructure was put into administration with debts of more than £3 billion. In a brutal assessment from Mr Byers, Railtrack was "finished" and there would be no help for shareholders.
The government's actions over Railtrack, and Mr Byers' comments in particular, have incensed financial investors. They have also raised important questions about the future of Labour's plans for private investment in public projects and the sincerity of its relationship with big business.
Railtrack's demise was catastrophic for shareholders. But this was no ordinary insolvency and the Labour government stands charged with reneging on a promise of £700 million in aid while Railtrack and its shareholders prepare to launch legal action to recover £350 million in frozen assets and compensation for lost investments.
The first sign that Railtrack was in deep trouble came during Tony Blair's speech at the Labour Party Conference last week when he said parts of the railways were "a disaster". Two days later, Mr Byers called in the chairman of Railtrack, Mr John Robinson, and told him the government was not prepared to give Railtrack a £150 million tranche of a £1.5 billion subsidy agreed in April. Without the extra money Railtrack was effectively insolvent.
It was clear Railtrack's financial and management problems were compounded by public hostility following the fatal train crashes at Southall, Paddington and Hatfield. In the early days of privatisation the company was weakened by the departure of many junior and middle managers who knew the industry intimately and, crucially, knew how to run trains on time. Extra layers of bureaucracy when Labour came to power and a "culture of arrogance" at Railtrack increased animosity between the company and the rail regulator.
Meanwhile, costs for route modernisation on the west coast mainline spiralled out of control from £2.3 billion to more than £7 billion. Railtrack's image suffered another blow in May when it asked the government for more money - another £2 billion - but Mr Byers had lost patience. Most financial observers agree that Railtrack's inability to control its finances was the main cause of its demise. But it is arguable that the complex structure of rail privatisation, rushed through in the final months of John Major's Conservative government - splitting the rail infrastructure from the train operating companies - contributed to its problems. The scheme was originally intended to encourage competition, but the conflicting interests of private rail companies and safety standards, as well as the obvious need for investment in new tracks, fostered an industry-wide blame culture.
There have been a few hints this week that Railtrack shareholders could receive some compensation. But even if they do, Mr Byers may come to regret the declaration that Railtrack was "finished" and the aggressive language he used in demonstrating his initial determination not to bail out shareholders.
Within a matter of days, a business partnership with the government has come to look riskier than before. Will Labour pull the plug on private utilities such as water companies if they accidentally pollute a river, a financier asked this week. Analysts warn that private investors could lose confidence in public/private partnerships and demand higher returns for riskier investments; and the Mayor of London, Mr Ken Livingstone, has again called on the government to abandon the partial privatisation of the Tube.
The demise of Railtrack is disastrous for shareholders. It could also be disastrous for Labour's plans to revitalise Britain's public services.