THE united group of Hearts supporters who plan to buy the club could have an offer in place within weeks. They believe that a Lithuanian court’s ruling yesterday, that Ukio Bankas has ten days in which to appeal against bankruptcy proceedings, has given them a timetable in which to formulate a bid.
The group, chaired by Ian Murray MP and consisting of representatives from six Hearts supporters’ organisations, were at Tynecastle last night for a scheduled meeting. They aim to accumulate pledges of financial support and make an offer for the club which would free it from control by parent company Ubig – and from the £15million debt the club owes to Ukio.
The Kaunas District Court hearing, called at the request of the Lithuanian Central Bank, ruled that bankruptcy proceedings should begin against Ukio, which has been in temporary administration since February. The court also named the company Valnetas UAB as the administrator of Ukio, which was owned by Vladimir Romanov, who still has a controlling interest in Ubig.
Romanov and other interested parties now have ten days in which to appeal against those decisions. Last night, a Ubig source said it was as yet unclear whether such an appeal would be made.
Should bankruptcy proceedings go ahead, the administrator would be tasked with realising maximum value for Ukio’s creditors from its assets. Those assets include a security over Tynecastle, and also – according to temporary administrator Adomas Audickas – a claim over the 79 per cent shareholding in Hearts which was previously thought to be controlled by Ubig.
There is still confusion about the precise relationship between Ubig and Ukio. The security on Tynecastle and other assets were transferred from the former to the latter in the weeks before Ukio went into administration, and it remains to be seen if the new administrator can successfully assert ownership of those assets, or if they will be deemed a debt which Ubig can reclaim from Ukio.
Should there be a ruling that Ukio do in fact own 79 per cent of the shares in Hearts, the board of the Scottish Premier League would then have to take a closer interest. At present, as neither Hearts nor Ubig have suffered an insolvency event, the SPL will not take action against the club.
There are no hard-and-fast rules to define what happens if a club’s parent company suffers an insolvency event. Indeed, there are no hard-and-fast rules about how a parent company should be defined. Even if a parent company of Hearts or any other member club did suffer an insolvency event, the SPL board would have to assess various factors before deeming that the club itself should have a points penalty imposed. One of those factors is the club’s current ability to carry on normal daily operations without need of continued financial support from the parent company. Hearts insist that they have been doing this since early last year.
Even so, although Hearts are now making ends meet domestically, they do not have the resources to repay the £15m owed to Ukio if the administrator tries to call that in. He would then have to decide how best to recover that sum or part of it.
That process could see ownership of Hearts pass to the highest bidder, as the administrator’s obligation would be to get the best deal for Ukio’s creditors, regardless of sentiment. The fans’ group know that in such a situation they could be outbid.
But, with no credible outside bidder having emerged in the 18 months since Romanov put the club on the market, they believe the administrator could be obliged to deal with them.
They would in essence offer to buy the debt for a lump sum – perhaps no more than £2m – and would then take over a debt-free club.
Murray, the MP for Edinburgh South, said he did not think the Kaunas Court’s decision had necessarily made the position worse for Hearts.
“Ukio have been bankrupt all but formally for the past five or six months,” he told The Scotsman. “This is a formal process in which the administrator is liquidating the business.”
And he added that Ukio’s claim of Hearts’ majority shareholding should not deter fans either.
“This doesn’t change the fact that there is a very strong opportunity for Hearts supporters to buy the club. The bankruptcy decision may even help, by making the situation clearer.
“All this does is strengthen our resolve to say to Hearts fans: It’s now or never. Please get pledging. We should use this ten-day window as a good to our own timetable, and continue to encourage Hearts supporters to pledge as soon as possible through the Foundation of Hearts website.”
At the time it went into administration, Ukio’s liabilities exceeeded its assets by almost £300m. Far more than ten days may therefore have passed before the administrator gets round to dealing with Hearts’ £15m debt – in which case, the supporters would have more time to put a bid together.