Hearts to enter administration and start next season with a 15-point penalty

John Greechan

Hearts are bracing themselves for an acrimonious court battle that could tip them straight into liquidation and threaten their very existence.

Just hours after Monday’s dramatic announcement that they were going into administration, a new nightmare hovered into view when the administrators of main creditors Ukio Bankas challenged their right to seek protection from debts.

On Monday night, Ian Murray MP, Foundation of Hearts bid leader, admitted it was a grave day for the club, but said defiantly: ‘Today is the darkest day in the history of Heart of Midlothian Football Club. But, in tragedy which has finally befallen the club, we must look to the future.’

He was speaking after Hearts started moves to appoint KPMG as administrators, hoping to buy breathing space from both the insolvent Kaunas-based bank - which is owed £15million - and parent company UBIG, who hold £10million of club debt.

However, Sportsmail understands the Lithuanian firm in charge of picking over the bones of Vladimir Romanov’s bankrupt bank will ask the Court of Session in Edinburgh to reject the club’s petition - and instead appoint a firm chosen by them.

Hearts sources fear that any UK-based company acting on behalf of Ukio Bankas would be more likely to seek a quick sale of assets, even if that means killing the club and flogging Tynecastle, in a bid to recoup cash immediately.

Insiders say yesterday’s decision, which will lead to job losses across the board and see Gary Locke’s team hit with a 15-point penalty ahead of the new season, was prompted by two fairly recent drastic changes in the club’s finances.

Last month Ukio Bankas demanded four per cent interest payments on their debt for the first time ever, while the impact of losing an historic ‘big tax case’ meant the club had to pay £500,000 per year to HMRC. This left them struggling to find £1.1million a year without spending a penny in wages or other normal costs.
Life or death: Vladimir Romanov's side are falling to pieces

Life or death: Vladimir Romanov's side are falling to pieces
Downbeat: Gary Locke's Hearts side could start the season with a 15-point penalty

Downbeat: Gary Locke's Hearts side could start the season with a 15-point penalty

Once the jewel on Romanov’s sporting crown, revelling in two Scottish Cup triumphs and reaching the Champions League qualifiers by paying entirely unsustainable wages, Hearts are now faced with a life or death situation.

And supporters looking to buy their club insist that only putting money into a takeover bid can stave off the two main threats to the club - liquidation and falling into the hands of another overseas owner.

Fresh from the wreckage of being the plaything of a Russian banker now a fugitive from international justice, many supporters are wary of the mysterious American and Scandinavian consortia credited with an interest in buying their club.

The only group to have publicly fronted up about their plans are the Foundation of Hearts, a collection of six different supporters’ bodies who have so far gathered 4200 pledges - due to be turned into hard cash immediately.

Bid leader Murray said: ‘I’d say to all the Hearts fans and anyone who’s interested in fans’ ownership to get onto the Foundation’s website and start pledging their support in order for the fans to own the club.

‘Anyone who has been mentioned as interested in buying the club, now is the time to show us the colour of their money.

‘Being able to deal directly with a respected firm like KPMG will certainly be easier than trying to go through the mire of dealing with organisations which are currently controlling the club in Lithuania.

‘We have 4,200 fans who have made pledges through the Foundation of Hearts website and we’ll be converting those pledges to cash in the next 24 hours by sending our direct debit mandates to those fans who have pledged money.

‘We’ve heard about people who are potentially interested in buying into the club - one Scandinavian, one American, a whole host of parties.

‘But the issue here is that the Foundation of Hearts are the only group which has come forward with any credible plan. Everything else is just speculation and talk through the media.

‘Today is the darkest day in the history of Heart of Midlothian Football Club. But, in tragedy which has finally befallen the club, we must look to the future.
Labour MP and Hearts supporters chief Ian Murray speaks to the press about his clubs current situation

Labour MP and Hearts supporters chief Ian Murray speaks to the press about his clubs current situation

‘A club with a history as rich and proud as any in the world, now only us, the supporters, can ensure Hearts has a future - and not just a future, but a future we can be proud of.

‘The decline of Hearts into administration is not as a result of those people who are tonight suffering. The staff, who have long worked under great pressure, and the supporters, who have put in millions to keep the club alive, are not to blame. Those who have caused this pain are culpable.

‘But our focus must be on the future, even if today hurts as much as it does. The Foundation of Hearts is committed to a fan-led, community governed, transparent, and well-structured football club, with supporters are at the very heart.

‘We are backed by every one of the key supporters groups, by a significant group of former players, and by key players in the Edinburgh business community.

‘The only real and credible buyers at this stage are the Foundation of Hearts - and that is why we are asking every Hearts fan for their support.’

Any administrators will be bound by a requirement to do their best by creditors, but key players in the Foundation hope that, even if other bids put more money down in the initial purchase price, their model of fans pledging monthly payments will make them the most credible long-term buyers.

HEARTS TIMELINE

2005 - January 29: Hearts' board approves Vladimir Romanov's investment, allowing him to eventually secure 80 per cent of club shares and control of the Jambos.

2006: A series of managers are hired and fired by Romanov as Hearts qualify for the Champions League.

2010 - May 3: Hearts reveal club debt has risen to just under £35million - an increase of £5million in the space of a year.

2012 - April 16: Hearts admit players will not be paid on time just four months after December wages appear late.

May 19: City rivals Hibernian are humiliated with a 5-1 defeat in the final of the William Hill Scottish Cup as Hearts clinch the trophy for second time in six years after 2006 final's triumph over Gretna.

October 22: The Jambos are hit with a transfer embargo by the SPL after six players and manager John McGlynn receive their October wages six days late.

November 7: Hearts confirm they have been served with a winding-up order over a tax bill of almost £450,000.

December 3: The tax bill is settled after the Hearts support raise more than £1million through a share issue, staving off the winding-up order. Repayment plan for a second tax bill worth £1.5million is also agreed with HMRC.

December 20: The SPL place the Tynecastle outfit under an 'indefinite transfer embargo' over the failure to make bonus payments to their players following their Scottish Cup win in May.

2013 - January 17: The SPL lifts the transfer embargo placed on Hearts after they pay January wages on time - but rules they will only be able to sign under-21 players on a one in, one out basis.

March 5: Romanov's decision to resign from the board of UBIG, the company which holds a majority stake in Hearts, following the collapse of Ukio Bankas sparks speculation that Russian may also surrender control of Hearts.

May 18: Hearts are spared immediate relegation from the top flight after the SPL announces Hearts will not be subjected to an immediate points deduction after concluding an insolvency event had not occurred at the club's majority shareholder UBIG.

June 4: The club is again forced to downplay administration fears after reports of another £100,000 tax dispute with HMRC.

June 12: The administrator of Ukio Bankas says he has 'no reason or desire to harm Hearts' after a court in Lithuania upholds a decision to liquidate the bank.

June 13: Club announces that all their players are up for sale as fears for their future enters a 'critical' period.

June 14: SPL confirms Jambos fail to pay 'a number' of their players their July wages and hit them with an immediate transfer embargo.

June 17: Hearts confirm they have served Court of Session with intention to appoint administrators.