Report lays bare the full horror of Hearts' crippling £28.5million debts

Alan Marshall

1 Aug 2013 07:37

ADMINISTRATORS have revealed the true extent of the club's debts with a meeting with creditors due to take place at Tynecastle on August 12.
The full extent of Hearts' financial predicament has been laid bare in a 45-page report. The full extent of Hearts' financial predicament has been laid bare in a 45-page report.
Alex Todd/Stockpix.eu

HEARTS administrators BDO have revealed the club owe £28.5million after sending a detailed report of the club's debts to all 200 creditors.

The full extent of Hearts' financial predicament has been laid bare in a 45-page report.

It was previously thought the Tynecastle outfit's arrears stood at around £25m after years of mismanagement by departed owner Vladimir Romanov.

But the dossier paints a more bleak picture. As well as the £15.5m and £8.2m due to Ukio

Bankas and UBIG – Romanov's collapsed businesses in Lithuania – other significant creditors are also listed.

This includes £1.9m due to Her Majesty's Revenue and Customs. This debt is due from a £1.75m tax case that the club lost last year.

A total of £1.7m is owed to Milson Capital Corp and Ensco 165 Ltd – companies thought to be controlled by Romanov. Milson loaned £1.2m last season to pay players' wages.

The report states Hearts owe £535,000 in football debt, which must be repaid in full by any new owners.

Liverpool are due £47,000, while the likes of Rangers, Livingston, Ayr United and Stenhousemuir are waiting on smaller amounts.

The club is also in arrears to their training base landlords Heriot Watt University to the tune of £146,000.

Creditors are due a total of £28.424.336 but that amount could rise further with BDO expecting more claims.

Hearts supporters rallied behind the club when it plunged into administration on June 19.

Over £813,000 was brought in from season ticket sales, while sponsors Wonga gave an advance of £103,000.

Compensation income from the Arvydas Novikovas' move to Erzgebirge Aue in Germany amounts to £84,000.

For the period of June 19 to July 26, a total of £1.269.107 came into the club, with only £310,630 going out – including £212,000 on wages.

The report notes the 18 employees made redundant (13 office staff and five players) are preferential creditors, with their claims being processed by the Department of Trade and Industry and expected to be in the region of £90,000.

A meeting of the creditors and BDO is due to take place at Tynecastle on August 12 for 'the purpose of considering the Joint Administrators' proposals and determining whether to establish a Creditors' Committee'.

The administrators for the club's biggest creditor Ukio Bankas this week told the two parties bidding to take over the club that they must improve their offers. Fans group the Foundation of Hearts submitted a £3m offer for a CVA, while Angelo Massone's Five Stars Limited tabled £4m.

BDO will name a preferred bidder and that group will hope to reach a pence-in-the-pound CVA debt compromise with the club's creditors.

Hearts will discover today whether they are to face any punishment from the SFA for plunging into administration.

The Judicial Panel Tribunal has been rearranged for 1.30pm this afternoon after the planned July 18 hearing was postponed.

Hearts' joint-administrator Bryan Jackson is expected to attend the Hampden meeting, having already said it would be a 'disaster' if the club were to be fined.

Penalties available to the Panel include a fine, signing embargo and suspension or termination of Hearts' SFA membership.

The Jambos already have a signing ban while the club remains in administration.

Meanwhile, Hearts administrators BDO have run up a £189,000 bill for their first month of work at Tynecastle.

Joint-administrators Bryan Jackson, Trevor Birch and James Stephen were appointed on June 19.

The insolvency practitioners say they have dedicated a total of 716.95 hours to the troubled Edinburgh club, which amounts to £189.499.75.

The details of their involvement with Hearts are outlined on the creditors' reports.

It reads: "This shows a total of 716.95 hours at an average charge out rate of £264.31 totalling £189,499.75 + VAT, together with disbursements of £3,005.17."

Taken from the Daily Record