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Hearts CVA could leave creditors empty handed 1 August 2013

Unsecured creditors of embattled Heart of Midlothian FC could be left out of pocket should the club exit administration via a Creditors Voluntary Agreement (CVA).

Unsecured creditors of embattled Heart of Midlothian FC could be left out of pocket should the club exit administration via a Creditors Voluntary Agreement (CVA).

In a report sent to all creditors, administrators BDO state that a CVA is the “first objective” to taking the club out of administration.

The total claims by creditors of the club amount to £28.4m, the majority of which is owed to the collapsed Lithuanian companies of former owner Vladimir Romanov.

The club also owes £15.5m to Ukio Bankas, which was declared bankrupt in June. Ukio Bankas holds the club’s stadium, Tynecastle as security against the debt.

Tynecastle is currently valued at £13.75m by Hearts, although BDO has since commissioned a revaluation.

A CVA agreement is dependent on the approval of administrators, due to the £24m debt owed to shareholders Ukio Bankas and UBIG.

Three bids have been made for the insolvent club since it entered administration, however all three have been dismissed by administrators for Ukio Bankas as “unacceptable”.

Other debts owed by the club include £1.88m to HM Revenue and Customs, £90,715 to Edinburgh County Council and £34,000 to Big Hearts Community Trust.

Employees of the club are also owed in excess of £58,000. Since the appointment of BDO as administrators, 18 staff have been made redundant, including 5 members of the playing staff.

Hearts have been issued with a player registration embargo until 1 February 2014 as punishment for entering administration by the Scottish Football Association today (1 August).

 

 

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