Hearts administration: Debts total £28.5m

HEARTS administrators BDO have revealed that the club owe £28.5 million 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 document compiled by the troubleshooter.It was previously thought that the Tynecastle club’s arrears stood at about £25m following years of financial mismanagement under departed owner Vladimir Romanov.

By DARREN JOHNSTONE Thursday, 1st August 2013, 7:32 pm

Hearts have been handed a transfer embargo until the end of January. Picture: Ian Rutherford

But the dossier paints a more bleak picture. As well as the £15.5m and £8.2m due to Ukio Bankas and UBIG – Russian businessman Romanov’s collapsed companies 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 when they agreed a repayment plan of three separate £500,000 instalments.

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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 that Hearts owe a total of £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 stricken club when it was plunged into administration on 19 June amid grave cashflow problems.

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

Compensation income from the departure of Arvydas Novi­kovas to German outfit Erzgebirge Aue amounts to £84,000.

For the period of 19 June to 26 July, a total of £1,269,107 came into the club, with £310,630 going out, including £212,000 on wages.

The report notes that the 18 employees made redundant (13 office staff and five players) are listed as 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 12 August 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 Company Voluntary Arrangement, while Angelo Massone’s Five Stars Limited tabled £4m. BDO will name a preferred bidder from the two and that group will hope to reach a pound-in-the-pence 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.