A winding-up order against Hearts is hardly newsworthy, it happened in 2009 and 2010, but Vladimir Romanov’s comments this week suggest his days of funding the club have ended. Much of the debts are owned to the Ukio Bankas, which Romanov is a large shareholder in, while players, small creditors and HM Revenue and Customs are also exposed.
Romanov previously converted a large chunk of Hearts’ debt to shares held by the bank, an investment it is unlikely to see a return on, so the possibility remains that Ukio could write-off the Hearts debt and use their majority creditor status to out-vote HMRC and allow the club to pay as little as a penny in the pound.
This is, however, a seriously worrying time for Hearts fans as well as the club’s creditors. In Scotland we tend to refer to Ukio Bankas as Romanov’s bank, as though it was a wholly owned business. It’s not. Ukio have fiduciary responsibilities to their shareholders, all shareholders. As such, the prime residential development opportunity off Gorgie Road presents a huge problem. Hearts previously received a bid of over £20m for their stadium from a housing developer and Ukio will have title to the land.
When Ukio Bankas previously converted Hearts debt to shares they would have slipped straight into the bank’s assets column, irrespective of their resale value. On paper, there would have been no negative impact for the bank. Writing-off debt when you hold an asset is a different scenario. Anyone who believes that a bank can easily walk away from a £20m asset sale has not fully appraised the situation. Without players, who have not been paid and have been told to find new clubs, or a stadium, there is no football club.
There is a Kodak Moment coming soon at Tynecastle; I predict Livingston FC might be in for another name change in an attempt to harvest some new support.