Stuart Bathgate: Creditor unity can save Hearts

Foundation of Hearts say four major steps can lead to a successful takeover. Picture: David Lamb

Becoming preferred bidders back in August was the first, Tuesday’s agreement by the administrators of Ukio Bankas to start talks on a Company Voluntary Arrangement (CVA) was the second. Two down, two to go.

A lot of work remains to be done, and the path to full ownership may yet be strewn with obstacles, but everything is gradually falling into place.

The leading members of the Foundation remain no more than cautiously optimistic. They know better than anyone both how hard it has been to get this far, and how big a task it will be, if and when a CVA is agreed, to return Hearts to long-term financial stability.

But, so far, their meticulous preparation has paid off. They are on the right track and every single piece of progress makes ultimate victory more likely.

“I’ve always thought of this as a process with four big steps,” Foundation chairman Ian Murray told The Scotsman yesterday. “First is us becoming preferred bidders. Second is the Ukio administrators agreeing there should be a CVA.

“Step three is the Ubig administrators, when appointed, agreeing the same thing. And then step four is the final agreement itself. Completion of the CVA and the takeover of the club.

“Step one happened a couple of months ago and now we’ve completed step two.

“We’ve always thought that step three becomes easier to achieve once step two has been taken, and then step four will be easier once the first three are complete.”

Significant progress towards completion of the third step, agreement by the administrators of Ubig, could be made today when a hearing in Lithuania is expected to appoint those administrators. Ubig, Hearts’ parent company, has been in limbo since initiating bankruptcy proceedings in the spring. It owns 50 per cent of the shares in the football club, while Ukio owns 29.9 per cent and has the security over Tynecastle.

Administrators of one company have no formal obligation to co-operate with any other body. Indeed, in some circumstances, their obligation to get the best deal on behalf of their own creditors could compel them to take hostile action. But Ukio and Ubig, both of which were once controlled by Vladimir Romanov, have so much in common that co-operation makes sense. There are savings to be made by pooling their resources, and Murray thinks that this week’s agreement with Ukio makes that co-operative approach more likely.

Of course, the Lithuania-based administrators of the two companies could work together to try to strike a harder bargain with the Foundation. But Ukio have had months to come to terms with how much the Foundation can offer, and this week’s agreement by them shows they are willing to negotiate realistically. That is an implicit invitation to Ubig to do the same.

Murray added: “There have been delays before and we are certainly taking nothing for granted but we do hope that the court hearing will go ahead as planned and appoint a liquidator for Ubig. It would then appear to be in the best interests of both Ubig and Ukio to work closely together.”

Of course, while progress is being made behind the scenes, Hearts’ plight on the field has deepened in recent weeks.

Defeat by Motherwell on Saturday means Gary Locke’s team have taken just one point from their last six Premiership matches. If they lose at Kilmarnock on Saturday they will be 16 points adrift at the bottom of the table – a bigger gap than the 15-point deficit with which they began the season as a punishment for going into administration.

It goes without saying that the Foundation want Hearts to do as well as possible and that the more successful the team is, the more the financial picture at Tynecastle will brighten. But the group has planned for all eventualities, and is not banking on cup runs or high league placings to make ends meet.

“In common with all other Hearts fans, we were under no illusions about this season,” Murray added. “We always expected it to be a very bumpy ride, and that’s how it’s turned out so far.

“It’s an incredibly young side, and they’ve achieved some remarkable things already. Yes, they’ve lost a few games lately, but I think some recent matches have shown what a narrow dividing line there is between success and failure. So we’re not disheartened. Not in the slightest. We have budgeted for several options, and the worst-case scenario is one of them.

“One thing I would add is that it’s never too late for more people to sign up as members of the Foundation by pledging a monthly direct debit. Maybe some people have got the impression that, because negotiations are ongoing, no more needs to be done, but that’s not the case.

“The more people we have making pledges, the more secure Hearts will be, not just if and when we take over the club this season, but also in the seasons to come.

“We not only have to buy the club. We have to rebuild it as well.”

Once administrators BDO moved in at Tynecastle and came to terms with the wreckage left by Romanov, they predicted it would take until around the end of this year, or some way into January, for their job to be done.

Provided that events in Lithuania proceed as planned today, that timescale continues to look realistic.

In some ways, the really hard work will only begin then for the Foundation, once they have to concern themselves with the daily running of the club. But the diligence with which they have worked so far is as close as we can get to definitive proof that they will be up to that task.