Hearts set to enter administration

17 June 2013 06:16

Problems at one of Scotland's most historic sides Hearts deepened on Monday as it was revealed that they will go into administration on Tuesday.

Papers have been lodged with judicial authorities in Edinburgh to formally begin the process.

It is the latest blow to hit the club as last Thursday they announced that all their players were up for sale as they sought to raise some money to alleviate their huge financial worries.

The club - four-time champions and eight-time Cup winners - face a funding crisis and daunting debt repayments.

They were unable to pay the players last week as Hearts continue to struggle.

That followed the threat of a winding-up order after Revenue and Customs threatened action over an unpaid £100,000 (US$157,000) tax bill, although the majority of that sum has been paid.

Hearts owe £15m (US$23.5million) to Ukio Bankas, which has been declared bankrupt.

UBIG was controlled by the club's owner Vladimir Romanov until he resigned from the board after the company's assets were frozen.

Hearts narrowly avoided relegation from the SPL last season after league bosses decided that Romanov's financial problems had not breached its rules.

The liquidator of the Lithuanian bank can sell the 29.9% shareholding it has in Hearts as well as Tynecastle Stadium, which was held as security for the debt.

In addition, another £10m is due to the club's Lithuanian parent company, UBIG - who have close to 50% of the shares and is claiming insolvency.

A liquidator with the power to sell UBIG's Hearts shares will only be appointed if the company's bankruptcy is formalised.

All the assets of UBIG have been frozen by the Lithuanian courts.

KPMG will be the company taking on the administration of the troubled club, while staff have been informed of the situation.

If Hearts remain in administration by the opening of season 2013-14 in August, a points deduction of 15 points would be incurred.

Source: AFP