Hearts await Ukio Bankas outcome

Staff writer
Thursday 2 May 2013

The latest twist in the saga of Hearts' finances will take place in Lithuania this afternoon, with Ukio Bankas, the bank formerly owned by the Tynecastle club's majority shareholder Vladimir Romanov, to be declared formally bankrupt.

The action, requested by the Bank of Lithuania, will be heard at the Kaunas District Court and could – in the worst-case scenario – lead to the incoming bankruptcy practitioners calling in around £15m of debt owed by the club, causing Hearts to enter administration.

If implemented before June 1, that would prompt an 18-point deduction from the Scottish Premier League and leave Hearts facing a financially-devastating relegation from the top flight.

Ukio Bankas, which folded amid debts of 1.2bn Lithuanian Litas (around £300m), also holds a £6.8m floating charge held against Tynecastle Stadium, which further complicates matters. Hearts' total debt amounts to around £25m when money owed to majority shareholder UBIG is factored in.

However, football finances expert Neil Patey, a partner in accountancy firm Ernst and Young, believes corporate liquidators Valnetas UAB, who are expected to be appointed as bankruptcy administrators, will not call in Hearts' debt to the defunct bank.

Patey said: "I would be surprised if there was any immediate action from the administrator. I think it will take him months to get to the bottom of all the operations of the bank, decide what he wants to do and carry out that process.

"He will need to sell assets and many other things. While there seems to be a medium-term threat of administration at Hearts, I would be surprised if the actions of the administrator in Lithuania forced them into administration in the next few weeks or so.

"I think it will be a long, drawn-out process. The administration of Ukio is quite a complicated affair. There is a whole lot of other stuff to sift through aside from Hearts."

Hearts this week insisted they were "trading normally" in spite of rumours of impending administration, while pointedly confirming that all wage and tax obligations are up to date.

The Tynecastle club have been forced to slash costs in recent years after a halt in financial support from Lithuania.

Patey added: "They are obviously doing everything they can to bring things under control – transferring or letting players go to bring the wage bill down.

"It seems from the outside that they are coping. Wages, VAT and PAYE are up to date. If at any point they didn't pay wages or didn't pay VAT or PAYE, then that could bring a more immediate threat of administration."

Ian Murray MP, chairman of the working group of supporters seeking to purchase Hearts, this week called on the club's fans to pledge to a supporter- led takeover of the club, as events in Lithuania ensure a viable buyer will be required in the near future.

Taken from the Herald