Hearts face wait for CVA clarity from Kaunas

Hearts are awaiting the green light to proceed with a CVA from Ukio and Ubig. Picture: TSPL

But last night they had yet to receive the final go-ahead from Lithuania by Ukio and Ubig, who as major creditors and shareholders are essential to any Company Voluntary Arrangement (CVA).

Yesterday the two Kaunas-based companies – both themselves in administration – agreed in principle that the creditors’ meeting should take place at 10am today, with the members’ (or shareholders’) meeting following two hours later. But at close of business they had yet to reply to several minor points of clarification made by BDO.

Both BDO and the Foundation have had an anxious week since the creditors’ meeting last Friday was adjourned for seven days at the request of Ubig and Ukio. But they are now cautiously optimistic that, provided the legal niceties can be dealt with, there will be a positive outcome to both meetings. Administrators normally only proceed to a vote on a CVA after extensive negotiations, and provided they have a reasonable idea of how a vote will go.

Both creditors and shareholders have to vote yes for a CVA to proceed, with 75 per cent of the voting debt being required and 50 per cent of the shareholding. Ubig’s administrators are expected to abstain from both votes as they do not stand to lose or gain anything financially from a CVA, but those involved in negotiations on the Scottish side are hopeful that Ukio will vote yes. In that case, they say, the CVA can enter its next stage, a 30-day cooling-off period before any vote becomes final.

According to one source close to negotiations, today could be “a day to smile – but not to dance”. Having taken more than five months to get to this point, however, no-one is taking anything for granted.

The cooling-off period would last almost until the end of the year, after which time substantial legal work would remain before Hearts could exit administration and be freed from the restrictions against signing players that are currently in force.

Responding to one report last night that said Hearts would now be unable to leave administration before the transfer window closes at the end of January, the Foundation insisted that the timescale had always been tight.

“Any agreement of a CVA is subject to all sorts of terms and conditions on all sides, and that is a time-consuming process which cannot start until after the cooling-off period,” the Foundation said. “Given that would be the end of December, the times mentioned are consistent.”

While many Hearts supporters have harboured hopes of making signings in January to help the fight against relegation, the Foundation have always insisted they do not have the funds to embark on any spending spree in the event of a successful takeover. Because of that, they believe the exact timing of any exit from administration will have no impact on their plans for the club.

All creditors will be entitled to attend this morning’s meeting if it goes ahead as planned in the Gorgie Suite at Tynecastle.

The administrators of Ukio and Ubig will neither attend in person nor send any Edinburgh-based lawyers as their representatives, as they will already have sent their proxy votes to BDO before the meeting proceeds.

Hearts staff, however, are creditors and are expected to attend en masse, but Ukio, as the sole secured creditors, are the only people who will receive any money from the CVA, which is for approximately £2.5million.