Birch eager to 'avoid newco route at all costs'

ONE of Hearts' joint administrators has criticised Vladimir Romanov, the club's former majority shareholder, and his fellow directors for having "done the damage and then disappeared" and appealed to the Scottish Football Association to punish those individuals rather than the club itself for going into administration.

Hearts have been called to appear in front of an SFA judicial panel on July 18, with the potential sanctions ranging from a fine to suspension or even termination of their SFA membership. Rangers were fined £50,000 after entering administration last summer, while Dunfermline Athletic's were punished with a six-month transfer embargo.

Trevor Birch, of administrators BDO, praised the club's support as they closed in on the target of 3000 additional season-ticket sales needed to keep the club ticking over until a buyer can be found, and hoped that the SFA would act leniently by not handing down a financial punishment that he felt would set back the recovery process.

"You'd hope they [the SFA] would look at each administration on the basis of circumstances," said Birch. "We are left with a club which was the victim of the perpetrators who have done the damage then disappeared. We're here now in administration, so something has happened. Whoever were the directors of the club are who I am talking about as perpetrators. Go and find them and ban them from football for life. But to actually punish the club which is left which has done nothing is a very difficult thing.

"The penalties and the fines don't deter anyone because the people who do it are no longer in the game. The club is down; it needs help to recover. What it does not need is another whack on the head. If you go to the extreme and say 'actually, we'll just get rid of Hearts and go right until the end and obliterate them', what does that do for Scottish football?"

Birch revealed that he has been in discussions with three or four serious parties interested in buying the club, with a deadline for bids set for July 12. An early resolution, however, looks unlikely given the complexity of Hearts' ownership model. Parent company UBIG, who control around 50% of the shareholding and are owed £10m, are still waiting to appoint an administrator after filing for insolvency. Ukio Bankas, already in administration, own just short of 30% and also hold the floating charge over Tynecastle in relation to a £15m debt. Swiss-based Quantum Holdings, another with ties to Romanov, control around 15% but, according to Birch, also find themselves on the brink of administration.

Given all that, the administrator played down talk of Hearts being under new ownership by the end of August, believing, instead, they could realistically still be in administration by the start of next year. "I would like to think we're out by the window in January but you can't call it," Birch admitted. "It may be quicker, if the administrator is appointed [at UBIG] quickly and he says, 'yeah, there is no value, go and sell the shares', and the interested party is in a position to move. The earliest it could happen is probably three months because of the process of the administration and the CVA. Then build in the difficulties in trying to deliver the shares.

"The problem is that, unlike in England where you can set up a newco to buy the assets of a club and the Football League then transfer the membership, here you have to keep the same company and, therefore, deliver the shares. So you go to UBIG to ask for a sale of the shares, but then there is nobody to speak to because they are going through an insolvency process with no administrators appointed. According to the lawyer, that could be the end of July or August. That is the wrinkle."

BDO hope to "avoid at all costs" the need to follow Rangers' lead and take Hearts down the route of a newco but admitted it could be a consideration if difficulties emerge. "We might not be able to get the shares, and if we cannot get the shares then we have to start thinking 'is there another way of doing it?' and that might mean the Rangers way because they set up a newco because they could not do a CVA [Company Voluntary Agreement] because of HMRC [Her Majesty's Revenue and Customs]. But that took them out of the league so there was a precedent there. You try and avoid that at all costs. Whether the SPFL [Scottish Professional Football League] and the SFA would treat us the same way, I don't know."

Birch praised the fans for creating cashflow to ensure the club should be able to run until the end of the year at least. "It's a fantastic response," he said. "We thought we could get to 10,000 [season tickets] given the sales in the past, but for people to come forward with no certainty of getting through the season is fantastic.

"You always think you are going to the well again and maybe it's a bit final straw after the share issue and previous fundraising experiences, so to dig deep again shows you how important the club is to the community."

Taken from the Herald