Hearts administration: ‘Job losses inevitable’

STUART BATHGATE
Published on 20/06/2013 00:00

THE Foundation of Hearts chairman Ian Murray last night welcomed the appointment of BDO as the administrators at Tynecastle, insisting the legal move brought some much-needed clarity to the situation.

Hearts will start next season with a points total of minus 15 as a result of undergoing an “insolvency event”, and under SPL rules will also be unable to register new players while they remain in administration.

Bryan Jackson, James Stephen and Trevor Birch, all partners at the accountancy and business advisory firm, were yesterday appointed joint administrators by the Court of Session.

Jackson believes the club can be saved but has warned job losses are inevitable. “Clubs are always saveable. I wouldn’t take it on if it wasn’t saveable,” Jackson said. “But that doesn’t mean it will be saved. As we’ve seen in the past, various clubs have not been saved [because] they’ve run out of cash, or run out of time or can’t get a CVA.”

Asked if job losses at Hearts were inevitable, Jackson replied: “Yes, I would think so.”

Jackson, who will meet players and staff today, said the fans would have a vital role to play.

“It’s a huge club with a huge support and you know that support will rally round,” he said, before warning: “If people don’t support us [and] if there are not buyers and not funding, then obviously we can’t continue because we can’t keep the doors open.”

The appointment was made at the request of Ukio Bankas, Hearts’ major creditor, which is in itself in administration in Lithuania.

Hearts had requested the appointment of KPMG, but their parent company UBIG, to whom they owe £10million, sided with Ukio, to whom Hearts owe £15m, in favouring BDO. All three appointees have substantial experience of attempting to revive football clubs: Jackson is currently working with Dunfermline Athletic, Stephen has worked with Rangers, and Birch, a former Chelsea chief executive, was appointed administrator at Portsmouth last year.

The fact that Hearts and the two Lithuanian companies requested different administrators led to speculation that the appointment of BDO would harm the club, but Murray believes otherwise. His organisation is still on course to put in a bid, and he is confident that BDO will negotiate realistically.

“We have no problem whatsoever with BDO becoming administrators of Hearts,” the Member of Parliament for Edinburgh South said. “The appointment takes away a little bit of uncertainty. Different parties requesting different administrators is just the way the process works. At least that process has now begun.”

The 15-point penalty, which is likely to pitch Hearts into a season-long fight against relegation, would almost certainly have happened in the coming weeks, even if the club had not gone into administration now. UBIG has itself applied in Lithuania to be put into administration, and such an event, once confirmed, would have triggered the deduction, as the SPL rules, drafted last summer, also apply to parent companies of member clubs.

BDO is expected to hold a press conference either today or tomorrow to give details of its plans and what it has learned so far. Last night it released a short statement quoting Jackson. “I can confirm that we have today been appointed administrators of Hearts,” he said.

“Fans will, inevitably, be concerned about these developments and none of them will have wanted this moment to arrive. We will now undertake an urgent examination of the company’s records prior to making any further announcements.

“We are acutely aware of the need for speed in this process given the uncertainty of the last few weeks and the proximity of the season’s start. We will be talking to all the parties that have shown interest in the club in order to find a resolution as quickly as possible.”

If and when UBIG does go into administration, it could come under the control of Valnetas, the company which has already been placed in charge of Ukio. That would further simplify a situation which has been left murky because of the persistent refusal of Vladimir Romanov and his key employees to make a full disclosure about the precise state of his companies’ finances. But whatever happens in Lithuania, Murray is encouraged by the fact that he now has one firm to work with in BDO – and that BDO’s primary task is to get the club back on its feet. “We will now deal directly with BDO,” he added. “They have effectively become the board of the club, and we will make an offer to them.”

That offer is set to be for complete ownership of Hearts, but, with other parties also interested, the Foundation remains open to a joint approach.

Taken from the Scotsman