Administrators BDO Reveal Scottish Heart Of Midlothian's Debt Totals $43M
Scottish Premier League Heart of Midlothian administrators BDO have revealed that the club owes £28.5M ($43M) after "sending a detailed report of the club’s debts to all 200 creditors," according to Darren Johnstone of the SCOTSMAN. The full extent of Hearts’ financial predicament "has been laid bare in a 45-page document compiled by the troubleshooter." But the dossier "paints a more bleak picture." As well as the £15.5M ($23.5M) and £8.2M ($12.4M) due to Ukio Bankas and UBIG -- Russian businessman Vladimir Romanov's collapsed companies in Lithuania -- "other significant creditors are also listed." This includes £1.9M ($2.9M) due to U.K. tax authority HMRC. The report states that Hearts owes a total of £535,000 ($810,000) in football debt, which "must be repaid in full by any new owners." A meeting of the creditors and BDO is due to take place at Tynecastle on Aug. 12 for "the purpose of considering the Joint Administrators’ proposals and determining whether to establish a Creditors’ Committee" (SCOTSMAN, 8/1).
LIQUIDATION FEARS: In Edinburgh, Stuart Bathgate opined Ukio administrator Gintaras Adomonis' "mentioning the possibility of liquidation, for all that it understandably provoked a worried reaction in many Hearts supporters, was equally predictable." Since the Tynecastle club "went into administration in the middle of last month, that possibility has been there, as one of two potential paths." Whether you run a football club or any other business, once you are in administration you either achieve a Company Voluntary Arrangement with the agreement of at least 75% of the firm's shareholding, "or you are liquidated." That stark reality "has been visible every day to the leading figures in the Foundation of Hearts who have been negotiating in an attempt to be named as preferred bidders for the club." If Romanov's "ruinous reign had come to an end five or six years ago, we would be in a very different position just now." But this is not five or six years ago, and the "Edinburgh property market is not what it was." What if, "after rejecting the overtures of the three parties who want to buy Hearts, he found that no-one was willing to buy the ground?" Any property developer "would not only need to stump up several million to buy the land, then another half-million or so to clear the site, they would also have to factor in considerable reputational damage." After all, anyone instrumental in closing down Hearts "is likely to be loathed by a substantial section of Edinburgh’s population." The bad publicity "would simply not be worth it" (SCOTSMAN, 7/30). STV reported Hearts has been "barred from registering new players over the age of 21 until February by the Scottish FA." The decision "is punishment for the club entering administration." No financial penalty "was imposed by the disciplinary panel" (STV, 8/1). The EDINBURGH EVENING NEWS reported Hearts-Daft celebrities and wealthy businesspeople "are being urged to match the commitment of 'ordinary supporters' and back a fan-led consortium vying to save the club from extinction." Former Hearts Chair George Foulkes "has issued a clarion call for well-heeled Jambos to dig deep for Foundation of Hearts and help lift the threat of liquidation by taking ownership of the troubled Tynecastle outfit." He said, "People in positions of responsibility who are known Hearts supporters should be searching their conscience just now. A lot of ordinary fans have been doing everything they can to help the club while there are some members of the executive club -- and some former directors --who haven’t yet committed to the foundation" (EDINBURGH EVENING NEWS, 7/31).