The Administration of Ukio Bankas and its Effect on Hearts

Whilst the Rangers story last year was about, as it is now presented, the company which owned the assets and business which made up the football club, going into administration, the situation this year at Hearts comes from the opposite perspective.

Here it is the bank which is owed huge sums by the company which owns the assets and business which make up the football club going into administration. Simples!

Ukio Bankas, the Lithuanian Bank largely owned by Vladimir Romanov and his UBIG Group has been placed into administration, and the administrators are looking for buyers for the assets. That suggests that the value which UBIG can attribute to its involvement in Hearts will be slim to zero, and slim left town.

The corporate structure of Hearts is an interesting one.


Heart of Midlothian PLC is a company formed in 1905. Its ownership structure is as follows:-

UBIG                                        78.97%

Quantum Holding SA              15%

Others                                     6.03%

Quantum Holding SA is a Geneva based company. It was formed in 2006. Its first President, though only for a few months, was Julia Goncaruk. That name seemed familiar. A quick check of the Hearts website shows someone of that very name as a non-executive director at Tynecastle.

There is another company – Heart of Midlothian Football Club Ltd, which was formed in 1990. It is wholly owned by the PLC and is listed as dormant. It has one director – Sergejus Fedotovas. He is also on the PLC board.

What does administration mean for Hearts?

Let’s try to make it a bit clearer, shall we?

  • Heart of Midlothian PLC owns the assets which constitute the Hearts football club.
  • Heart of Midlothian PLC owes around £24 million to Ukio Bankas.
  • Ukio Bankas holds a standard security over Tynecastle.
  • Ukio Bankas has a floating charge all of the remaining assets.
  • Ukio Bankas is now in administration.
  • Heart of Midlothian PLC’s majority shareholder is UBIG.
  • Ukio Bankas’ majority shareholder is UBIG.

EDIT – 12.27pm Sunday 17th February 2013

Thanks to all for the added info regarding the make up of the debt and the charge and security holders. I’m always happy to be educated.

Time permitting will look to update piece later but it is clear, I think, that most unlikely Hearts stay in present ownership.

And not through choice.

Someone will pay something for Hearts – and I see from papers this morning that offers are already on the table.

I wonder if Brian Kennedy, who came into the Rangers bidding not as a Rangers fan but as a football fan, and wanting to save a famous football team, will offer to do the same here if necessary? ;-)


As was very clearly laid out in the share prospectus issued last year, and about which I wrote here:-

Hearts state that there is no guarantee UBIG will continue to support Hearts in the future. The Board is comforted by UBIG having supported the club since 2006 by funding and debt re-structuring.

Now, administration under the Insolvency Act 1986 in the UK is a complicated enough process. Administration under Lithuanian law is not something which is regularly discussed in the salons of Lanarkshire.

However the common thread is that both procedures can arise when the company in question is in financial problems, and usually some drastic solution is required.

In addition, in a UK administration process, the owners of a company in administration have significantly decreased powers to direct the course of the company.

On the basis that similar considerations apply, it would no longer be possible for UBIG, as a major shareholder in Ukio Bankas, to direct that Heart of Midlothian PLC should continue to receive funding on favourable terms. (By favourable I mean that the lender has not been demanding repayment).

Where the debt far exceeds the value of the assets, as is almost certainly the case here, then, as the Prospectus made clear, it was the support of the bank and of the owners which kept the company going.

If Ukio Bankas is needing money (as public statements about the administration suggest), then its administrator could come knocking on the door of Tynecastle looking for “proposals”.


Heart of Midlothian PLC does not have the money to pay. It could of course sell the ground and look to play football as a tenant of Murrayfield, Easter Road or Meadowbank? (Are there still football facilities at Meadowbank? I have no idea.)

Ukio Bankas would be able to force Heart of Midlothian PLC into liquidation, so the choice to sell the ground would be taken from the PLC’s hands.

Could the Rangers scenario be repeated? Could a new buyer appear who would be willing to take the assets, ground included, off the PLC?

The problem is that, as Ukio Bankas have a security over the ground, as I understand it, the administrator of the bank would need to be satisfied that he could not sell the ground for more, perhaps for development. There was no substantial secured creditor at Rangers and thus the administrators could sell off the ground and Murray Park without the heritable creditor intervening.

What would someone be willing to pay for Hearts, as a collection of assets? If Rangers, now valued at near or around £100 million sold for £5.5 million, then what value Hearts?

And as we have seen, the process of an asset sale does not guarantee retaining players.

Maybe Craig Whyte could re-appear and buy Hearts for £1?

The future looks, from this outside perspective, to be bleak, and actually made more so because the financial pressures come from outside rather than internally.

It is unlikely that an administrator appointed by the Lithuanian government to run Ukio Bankas will be at all bothered about the fate of a Scottish football team. Of more value to Hearts, and perhaps the only thing that might keep them afloat, is that Vladimir Romanov is a major figure in his home country and undoubtedly an influential one. On that basis the administrator might be less aggressive than with another company, knowing that Mr Romanov has every incentive to resolve these issues if possible.

But, should the administrator make his was along Gorgie Road to demand that the Ukio Bankas debt is paid, then one could very quickly see Heart of Midlothian PLC heading quickly for administration and then liquidation, and players and other staff being made redundant in droves.


Mr Romanov is clearly a master of negotiation and business risk-taking. If he still wants to play a role in Scottish football and still to own Hearts, then he will have to perform to the top of his game to reach an accommodation with the Ukio Bankas administrator. More likely the fate of Hearts might be tied up as a loose end, should there be a solution arrived at regarding the wider fate of Ukio Bankas.

As I often said about the Rangers mess, we shall have to wait and see!

Posted by Paul McConville



Filed under Football, Hearts, Insolvency

369 responses to “The Administration of Ukio Bankas and its Effect on Hearts

  1. lordmac

    Rangers should have banned the moaning fan and saved MURRAY LOL
    own up cam, what did you say to Murray have we got £ 22 MILLION pound in the Banko OR IS IT 22 MILLION ordinary SHARES WE HAVE GOT. IN THE CUPBOARD

  2. JimBhoy

    @Adam All aggressive tax avoidance is wrong but the UK government and HMRC policy stinks… Probably because the ones in the know work the system and therefore are reluctant to change that cash cow.

    Mick said so earlier in the week I believe and it is all fukin corrupt… Pay your way for the services you rely on and to help the community you live in otherwise we are all modern day savages.. Don’t avoid taxes for years and then when your stash is full in your autumnal years give something back, get the recommendation you crave, just pay as you go like the rest of us ya leeches..

    Football matters: Celtic should have been 5 up by half time mid week but the second goal chalked off for St J was a scandal, way onside.. Well done to the rangers reserves you can only beat who is put in front of ya..

    I would love for all the woes apparently in Scottish football that we have a young bunch of boys given present day circumstances who shine for us at the next tournament that we have a manager we can rely on to pick them or build with them.. Strachie aint the man.. Fuk sake thats all we want HOPE (for the future)… Kenny Miller … Pleazzzzzze give it up.

  3. JimBhoy

    So furthermore the TUPE qn and those who left before a rangers 2 or sevco contract was taken up…. That to me suggests BDO will be looking to make gains on any money that Chico received or thinks he will receive as part of the sequestration event. The players who left or were sold belonged to oldco rangers in admin…. The SFA agreement with rangers to pay footballing debt is never legal. However working on the businesses BDO have every right to pursue fees for those players who moved on before Chico officially took over because the players worked for and were owned by the old rangers..
    Any monies chico thinks is coming I would say BDO have a claim over on rangers or sfa/spl i dunno… Jelavic’s selling club seem to think they are now creditors to the old rangers for the fiver thats in the pot only cos chico didn’t pay the full amount so more litigation ahead I fear for £100k..

    Jeez what a story…!!!

    • ecojon


      I have to say that when I saw his old club’s comments I was momentarily puzzled and then I spotted some moon dust and formed my own conclusion – as you say they’ll be back to the moonbeam source in due course 🙂

  4. Jamie

    Any truth that Paul is doing a two page spead about Chico’s favourite charity receiving a windfall courtesy of the Dundee United Supporters turning up to watch their team humo the newbies?

    • Jamie

      oops that should be hump!

      • Raymilland

        The only show in town is the eagerly awaited LNS findings of oldco’s non adherence of football legislation. Meanwhile all the huffing and puffing pointing the finger at various tax dodgers is an utterly pointless exercise.

        It’s human nature to try and interpret matters to your own ideal; it can sometimes blind us to the truth.

        Whatever the outcome from LNS; it will be his interpretation of the truth; that is why he is the only show in town.

        Life is a Cabaret old chum.

  5. portpower

    Hearts & Rangers, the two sides that owned the corner stone. Good things come to those that wait? If you don`t ask you don`t get.
    I grew up with a pal whose family were staunch masons and eastern star supporters. Both of us are Celtic through & through but one night he took me round to his parents house were they were all gathered. Hearts & Rangers was the spite atmosphere that was sung that night. I sat in the lounge and my pal went out the back to get permission to grab me a beer. The conversation ended up back on to me when they found out I was there. These were people I see day in & day out who live up the road. Low and behold I was offered many a lift home without even offered a drink. Ever since that night I`ve never had hatred for Hearts & Rangers but the situation you`se two are in you`ve made the rest of my life the honest man I`ve been and I wait with Glee at the true result?. O and by the way if you ask for HELP you can get tae. You`ve had your shot and lost.
    Both of you`se need to seek help from the professional couch. Honestly.
    FFS get out there and enjoy yourselves. You`se need to look what you have and show that you can do the right thing. I`ll repeat again, you`se stuffed up and your on your own to fix & figure it out. If you ask for help, you never know,but not from me. I can`t talk for everyone but if you`se get the easy way out Celtic are waiting.

  6. JohnBhoy


    The old Rangers understood the theory of balance. If all competing influences have parity – similar club size, domestic fan base, financial clout etc. – then this could present the dangerously unpredictable fiasco of a level playing field, leading to ludicrously unfair equal competition between two city rivals, namely Celtic and Rangers. Thankfully, EBTs came to the rescue and redressed the balance in Rangers’ favour. That is the kind of equilibrium that appealed to the old Rangers. For every fiver that you pay in tax, we’ll pay ten less.

    The new Rangers likes balance too, in a variety of contexts: financial balance (no debt, courtesy of unpaid creditors), football balance (leapfrogging The Spartans FC to gain entry to the SFL without the need to follow the same rigorous, competitive application process), social balance (march on Hampden, boycott etc.) and msm balance (James Traynor, writing for The Daily Record while seeking, and finally securing, employment with Rangers).

    Chris Graham wants to maintain that traditional sense of balance ( He refused to take part in BBC Radio Scotland’s Sportsound because he concluded that the make up of the guest panel was not balanced enough in his direction. Below is the disreputable list of unhinged reprobates – with the exception of only one upstanding citizen – the BBC had the temerity to invite without first seeking Chris Graham’s approval [in fact, the BBC did attempt to barter with Chris Graham on the composition of the panel but, alas, to no avail]:

    1. Either Paul McConville or Andy Muirhead (Bloggers)
    2. Chris Graham (Blogger)
    3. Stuart Cosgrove (Journalist)
    4. Graham Spiers (Journalist)
    5. Jim Spence (Broadcaster presenting the programme)

    What were the objections put forward by Ibrox’s poster boy? Paul McConville is an intelligent, articulate, fair individual, one who bases his position on available evidence and legal precedent. He had to go. Andy Muirhead self-evidently failed to uphold the same uncritical pro-Rangers faculties as Chris Graham – the very idea that there should be two bloggers with different views on the same programme was hilariously at odds with the theory of balance as practiced by Rangers, old and new. Andy Muirhead had to go.

    Chris Graham had no obvious objection to Chris Graham appearing on the panel. He saw a lot of himself in Chris Graham. They could have been twins. The face that stared blankly back at him in the mirror was not made for asking difficult questions. He had to stay.

    The two journalists and the broadcaster? Despite a slow start to non-succulent lamb reporting, endemic in Scotland, they came good in the end and dispatched their duties with integrity. Without question, adherence to their job description wholly undermined their credibility: they too had to go. Furthermore, Stuart Cosgrove was not friendly enough with Rangers – “not a friend of the club” – while Graham Spiers and Jim Spence both committed the cardinal sin of recently referring to the new club The Rangers as… a new club.

    As further evidence of the BBC’s bias against The Rangers, Chris Graham bemoaned the minor legal technicality of the The Communications Act 2003, whereby fans of his club are required to pay their license fee like everyone else, otherwise they would retaliate with a boycott of the BBC: “We have no real option but to pay our licence fee and fund them… [so] boycotting them does not hit them in the pocket.” They do like to hit people where it hurts and it is exasperating, not to mention grossly unfair, when that opportunity is foiled by the laws of the land.

    Free speech is not an optional extra for a balanced media – it is an absolute necessity. Allowing a football club’s fans to place conditions on free speech, or to curtail it altogether, is the antithesis of democracy. It was John Diefenbaker, former lawyer and Prime Minister of Canada, who said that “freedom is the right to be wrong, not the right to do wrong.” The BBC was guilty of the latter by denying others the chance of the former. That error of judgement needs to be corrected. The alternative is a return to craven succulent lamb “reporting”, where balance meant turning a blind eye to debate and submitting copy to one club for approval.

    • Raymilland


      A superb analysis of the situation, can anyone on this blog rationally counter argue your view as posted above?

      I do sincerely hope that the scales of justice have been fairly calibrated.

    • Steven brennan

      Have the BBC responded to any of the above?
      I presume someone in authority is receiving an overdue rollicking.
      Was the original debate not about the social media network?
      How did Mr Graham turn it into something else and whynwas he allowed to do so?
      So many questions could be asked about this

  7. Brian Bremner

    All these comments about how hearts & rangers got what they deserve is not doing Scottish football any good. Seems to me They need help not criticism. Who is the next club to go.

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