HEARTS may have to wait to learn their SPL fate as lawyers attempt to get to the bottom of whether insolvency proceedings involving majority shareholders UBIG have actually started.
The company was included on a list of insolvent firms on a Lithuanian government website on Thursday after reportedly declaring itself unable to meet its liabilities but, according to club insiders, their understanding is that legal proceedings have not started, giving them hope that they will have no case to answer when the SPL lawyers present their case to the six-man SPL board tomorrow.
If Hearts are found guilty of breaking financial regulations the ramifications could be severe. They will be docked 18 points, which would see them slip to the foot of the table, offering Dundee a reprieve and consigning the Tynecastle club to at least a term in the second tier. The last time they were there was in 1981.
But, with so much riding on the findings, it is expected the SPL lawyers, who have to liaise with counterparts in Lithuania, will ask for more time to piece together the information.
The capital club owe their parent company £10 million, but have stressed to the SPL that they have not been reliant on UBIG since early 2012, something they say their financial results confirm. In the most recent directors’ report they stated they were “cautiously optimistic about the future of the business”, adding “This resolve and commitment will be particularly essential as we move forward given that the club can no longer depend on the support that it has received in previous years from UBIG.”
Crucially, in the context of the current matter they insist they have had no financial input from UBIG at any point throughout the 2012-2013 season.
While they are still hopeful that they will have no case to answer, the concede that remains the very best-case scenario, admitting that the best hope may yet be convincing the league that sanctions should be applied in the close season. That could probably see them start the new campaign with a deficit.
While there has been no official comment from the SPL it is understood that representatives are split on what outcome would be the most desirable, with some clubs unhappy that the Tynecastle club has continued to outspend most of their league rivals despite the financial problems they have had hanging over them, while others would see their self-interest better served should Dundee remain in the top flight.
However, with no title sponsor for the SPL and with the absence of Rangers already having a detrimental impact on club income as well weakening the package offered to the TV companies and sponsors, there are others who believe that the Hearts case offers enough grey areas to see then kept in the SPL, prescribing any punishment for next term.
The loss of the Hearts away support as well as the Edinburgh derbies are other factors being considered, although the SPL will be keen to be seen as acting equitably, without favour.
The six-man board, comprising SPL chairman Ralph Topping, chief executive Neil Doncaster, as well as Eric Riley (Celtic), Duncan Fraser (Aberdeen), Michael Johnston (Kilmarnock) and Stephen Thompson (Dundee United) are due to meet to discuss Hearts problems and possible rule breach tomorrow morning, ahead of the full SPL discussion on reconstruction.
But regardless of the board’s decision, the future still looks perilous for Hearts.
Having been forced to make massive cuts to their running costs in their quest to run self-sustainably, their onfield results have suffered but the off-field woes remain the biggest concern.
Club insiders have admitted that administration lawyers have been on standby for a number of weeks but say that action was precipitated by the financial collapse of Vladimir Romanov’s Ukio Bankas, not in response to talk of UBIG insolvency.
Romanov has challenged the Lithuanian authorities’ decision to begin bankruptcy proceedings against his business, which is said to owe creditors in the region of £300m. Should the bank’s administrator call in that debt, Hearts would almost certain face being placed in administration.
The fact that the bank, which also holds a £6.8m floating charge over Tynecastle, is in the hands of the administrators further complicates the matter.
In a note as part of the financial results for the year ending June 2012, the club confirms – under the sub-heading ‘Post balance sheet events’ – their repayment plan with Ukio Bankas.
The statement reads: “Since the year end £15 million of debt due to the company’s parent company UAB Ukio Bankas Investicine Grupe has been transferred to AB Ukio Bankas.
“This debt now falls due for repayment in full on 31 December 2015 and attracts interest of 4 per cent per annum payable quarterly.”
However, the more pressing matter remains which league Hearts will be forced to play their football next term. And the wait to discover that could stretch on.