Administration Question

[A Boy Named Crow]

I've been thinking...bear with me!

If Romanov were hounded out of Hearts we would certainly not be able to sevice our debt. Now this would mean going into administration, and quite likely the sale of Tynie. This would take a dirty great chunk out of the debt, we'd still be a fonancial shambles, but stay with me...

It has been shown that with the right team on the park Hearts are a highly marketable commodity. If the debt was slashed could we maybe find parties slightly less mental than Vlad to help unlock that potential?

My question really is, what are the sanctions for going into administration? Would we be docked points? If so how many? Or is it a case of automatic relegation? If it is a points deduction, then so long as we had a fairly average season in the first year could we not get away with it and be in a very strong position to build for the future? Obviously sans Tynie, but I don't think we are in a position anymore to ask for the Moon! Like I said, I'm just thinking out loud (well whatever you call that on the internet)...

[MacDonald Jardine]

I've been thinking...bear with me!

If Romanov were hounded out of Hearts we would certainly not be able to sevice our debt. Now this would mean going into administration, and quite likely the sale of Tynie. This would take a dirty great chunk out of the debt, we'd still be a fonancial shambles, but stay with me...

It has been shown that with the right team on the park Hearts are a highly marketable commodity. If the debt was slashed could we maybe find parties slightly less mental than Vlad to help unlock that potential?

My question really is, what are the sanctions for going into administration? Would we be docked points? If so how many? Or is it a case of automatic relegation? If it is a points deduction, then so long as we had a fairly average season in the first year could we not get away with it and be in a very strong position to build for the future? Obviously sans Tynie, but I don't think we are in a position anymore to ask for the Moon! Like I said, I'm just thinking out loud (well whatever you call that on the internet)...

 

I think it's a 10 point penalty.

I'm not clear how we rebuild with no ground and relying entirely on new investment.

[Guest jambomickey]

it's a 10 point penalty i'm sure! but we would rebuild a go back to being a football club again and not a circus

[Chip Douglas]

I've been thinking...bear with me!

If Romanov were hounded out of Hearts we would certainly not be able to sevice our debt. Now this would mean going into administration, and quite likely the sale of Tynie. This would take a dirty great chunk out of the debt, we'd still be a fonancial shambles, but stay with me...

It has been shown that with the right team on the park Hearts are a highly marketable commodity. If the debt was slashed could we maybe find parties slightly less mental than Vlad to help unlock that potential?

My question really is, what are the sanctions for going into administration? Would we be docked points? If so how many? Or is it a case of automatic relegation? If it is a points deduction, then so long as we had a fairly average season in the first year could we not get away with it and be in a very strong position to build for the future? Obviously sans Tynie, but I don't think we are in a position anymore to ask for the Moon! Like I said, I'm just thinking out loud (well whatever you call that on the internet)...

 

The thought of watching Hearts away from Tynecastle doesn't appeal to me.

 

The thought of watching "AFC Hearts" doesn't compute. If Hearts, as we know it, were put into liquidation, I'd pack in Scottish club football altogether.

 

For me, it's head down, baton the hatches and hope we come out the other end in a stronger position under the tenure of our present incumbents. That is, until a viable alternative is sourced.

[jlo2]

I've been thinking...bear with me!

If Romanov were hounded out of Hearts we would certainly not be able to sevice our debt. Now this would mean going into administration, and quite likely the sale of Tynie. This would take a dirty great chunk out of the debt, we'd still be a fonancial shambles, but stay with me...

It has been shown that with the right team on the park Hearts are a highly marketable commodity. If the debt was slashed could we maybe find parties slightly less mental than Vlad to help unlock that potential?

My question really is, what are the sanctions for going into administration? Would we be docked points? If so how many? Or is it a case of automatic relegation? If it is a points deduction, then so long as we had a fairly average season in the first year could we not get away with it and be in a very strong position to build for the future? Obviously sans Tynie, but I don't think we are in a position anymore to ask for the Moon! Like I said, I'm just thinking out loud (well whatever you call that on the internet)...

Given the financial shortfall of ?8.7million (after the sale of Tynecastle) it could be beyond administration.

 

http://www.football-finances.org.uk/hearts/debt2.htm

 

Adminstration incurs an automatic points deduction (as happened to Gretna last year. The administrator would then have to find someone to buy the club. If no buyer was forthcoming then liquidation would be the next step.

 

The only real option then would be to form a new club (similar to Airdrie United) and either try for admission to Division Three or to buy up say East Stirlingshire and move them to Edinburgh.

 

You can see why many argue against a sudden departure for Romanov!

[A Boy Named Crow]

I think it's a 10 point penalty.

I'm not clear how we rebuild with no ground and relying entirely on new investment.

It has been shown that the fanbase is there. With the right people on board who knows what could be negotiated? Robinson was obviously not capable, Romanov isn't trusted. With the right people in charge things would be very different. I have no idea who I'm talking about, but I don't buy the story that Romanov is the only show in town.

A ten point deduction would not be too much of a problem, obviously we would not be challenging for anything in that first year, but year two could be awesome!

All we need now is a backer, or a team of backers, willing to give it the time we need to build ourselves up into a proper football club again. I've posted on another thread that I'll do it as soon as my plans for world domination come good - but there must be other businessmen out there who have seen the potential of this club, who actually want to run a successful team (business) , rather than a shop window for Eastern European duds!

[SeeVee]

Gretna aside, I can't think of any club, north or south of the border, that has actually lost occuoancy of their ground. Why is it so certain that we would lose Tynie?

 

I don't think it ever gets beyond administration as long as a backer is found to take the club forward after the existing debts have been administered.

[Mild-Mannered James]

Because we have a large debt which we can't trade our way out of and the stadium is our only real asset.

[Therapist]

I wish people would do some basic research about financial matters before spouting a load of pesh about administration. So, for the hard of thinking....

 

Romanov would not put Hearts into administration. He would wind the company up - ie close it down. Administration would be a costlier option, so he would end up with less money. Administration does not make financial sense.

 

Rant over.

[JohnT74]

Administration certainly worked for Motherwell, but it's risky tactic. You would assume that UKIO would take what they could to clear what HMFC owes to them and that would include the proceeds from the sale of Tynecastle.

 

If we're lucky we would end up at Murrayfield, but it could lead to liquidation and that would be that.

[jamkb]

The only good thing about administration as i see it is romanov would have to take a major hit in the pocket as all the debt is owed to him or his* companies and the land is no were worth what we owe . Also i am sure we could stop tynecastle beeing sold for a very long time. we as a group of people in goverment ,council and local comunity could drag the the planning for any development out and make it worthless to any possible buyer. personally i would be willing to set light to any digger it came near tynecastle. so on the whole i don`t know what romanovs end game would be.but i feel as a group we neeed to get rid of him some how sad time indeed:mad:

[MacDonald Jardine]

Gretna aside, I can't think of any club, north or south of the border, that has actually lost occuoancy of their ground. Why is it so certain that we would lose Tynie?

 

I don't think it ever gets beyond administration as long as a backer is found to take the club forward after the existing debts have been administered.

 

Because their grounds were not in prime real estate areas possibly?

Motherwell were a special case because John Boyle wrote off all the debt due to him, which IIRC was the majority of it.

I'm not sure how leeds did it.

But if anyone thinks we would go into administration and survive intact with Tynecastle as an asset they're dreaming.

[Chip Douglas]

I wish people would do some basic research about financial matters before spouting a load of pesh about administration. So, for the hard of thinking....

 

Romanov would not put Hearts into administration. He would wind the company up - ie close it down. Administration would be a costlier option, so he would end up with less money. Administration does not make financial sense.

 

Rant over.

 

Theoretically, any other creditor could seek authority from the courts to put the club into administration.

[Stanley_]

Administration certainly worked for Motherwell, but it's risky tactic. You would assume that UKIO would take what they could to clear what HMFC owes to them and that would include the proceeds from the sale of Tynecastle.

 

If we're lucky we would end up at Murrayfield, but it could lead to liquidation and that would be that.

 

Even with Motherwell, they should have been relegated but survived. I think it was because of Falkirk not being able to be promoted.

 

If they'd been relegated then who knows what would have happened with them.

[merseyjambo]

The situation with Leeds, Bournmouth, Luton etc is one where there are many creditors whom they could not service their debt with. The creditors then agree to have the debt paid at x pence per pound and the remainder as far as I know is wiped out.

 

As far as I can work out, as VR owns the whole shooting match, as long as hes in charge administration wouldn't be a possibility as the majority of the debt is owed to UKIO Bankas. If they wan't their money back, as the majority shareholder, VR can Liquidate any assets to repay the debt.

 

I might be wrong as I'm no financial expert but as long as UKIO Bankas are continuing to be paid their interest I can't see administration being a possibility.

[jlo2]

Because their grounds were not in prime real estate areas possibly?

Motherwell were a special case because John Boyle wrote off all the debt due to him, which IIRC was the majority of it.

I'm not sure how leeds did it.

But if anyone thinks we would go into administration and survive intact with Tynecastle as an asset they're dreaming.

Motherwell used Administration to cancel the contracts of a number of underacheiving players on lucrative long term contracts signed before the Sky TV deal ended.

 

The rules have been changed.

[JohnT74]

I might be wrong as I'm no financial expert but as long as UKIO Bankas are continuing to be paid their interest I can't see administration being a possibility.

 

I would agree with that. We're paying UKIO/Romanov/whoever ?5000 per day in interest. Why would they want to cut that income source.

[A Boy Named Crow]

I wish people would do some basic research about financial matters before spouting a load of pesh about administration. So, for the hard of thinking....

 

Romanov would not put Hearts into administration. He would wind the company up - ie close it down. Administration would be a costlier option, so he would end up with less money. Administration does not make financial sense.

 

Rant over.

Of course Romanov wouldn't do it - but were he to leave, it is possible a new owner would. Post-administration, if done well, I think we could have a future. Right now, as I see it we don't.

[Brad]

Given the financial shortfall of ?8.7million (after the sale of Tynecastle) it could be beyond administration.

 

http://www.football-finances.org.uk/hearts/debt2.htm

 

Adminstration incurs an automatic points deduction (as happened to Gretna last year. The administrator would then have to find someone to buy the club. If no buyer was forthcoming then liquidation would be the next step.

 

The only real option then would be to form a new club (similar to Airdrie United) and either try for admission to Division Three or to buy up say East Stirlingshire and move them to Edinburgh.

 

You can see why many argue against a sudden departure for Romanov!

 

 

my biggest fear is since Vlad owns the club and the ground, say he decides he haas had enough and sells the ground for housing and not a penny goes towards reducing our debt on the grounds that he is trying to recoup his investment in Hearts and we will still end up owing Ukio Bankas ?30 mill + either way we are royally *****ed

[Therapist]

Theoretically, any other creditor could seek authority from the courts to put the club into administration.

 

I'm well aware of that Chip, but there really won't be any of significance other than UKIO.

[Therapist]

Of course Romanov wouldn't do it - but were he to leave, it is possible a new owner would.

 

You're not quite getting this financial thing are you?

[Italian Lambretta]

I asked the question last year about ownership rights to the name 'Heart of Midlothian FC'

 

If such a scenario occured that OUR club went into administration and the Stadium was sold, why should we have to forfeit the name 'Heart of Midlothian FC'?

 

Why should any one individual have sole rights to an Institution that has belonged to Edinburgh for over 100 years?

 

I for one don't think we should have to start again with another stupid name when we the FANS should retain the right to the existing one.

 

Unfortunately, when I asked the question no one seemed that bothered at the time.

[A Boy Named Crow]

You're not quite getting this financial thing are you?

 

I know - there are huge huge holes in my plan, I work in finance, I know that what I'm saying makes no sense. If nothing like this can come about do you really see a future for HMFC, because I don't! I think the key problem is that Vlad now effectively owns the debt and the club. If these were seperate we could be forced into selling the ground and paying off the debt. Because of Romanov's "master plan" to (not) wipe out the debt we are basically screwed.

[MacDonald Jardine]

my biggest fear is since Vlad owns the club and the ground, say he decides he haas had enough and sells the ground for housing and not a penny goes towards reducing our debt on the grounds that he is trying to recoup his investment in Hearts and we will still end up owing Ukio Bankas ?30 mill + either way we are royally *****ed

 

The ground is, I would assume, secured in respect of the debt.

Anyway Romanov couldn't sell the ground and just keep the money.

[SeeVee]

Because we have a large debt which we can't trade our way out of and the stadium is our only real asset.

 

I know, but surely the same was true of all the other clubs that have gone through administration?

[SeeVee]

Because their grounds were not in prime real estate areas possibly?

Motherwell were a special case because John Boyle wrote off all the debt due to him, which IIRC was the majority of it.

I'm not sure how leeds did it.

But if anyone thinks we would go into administration and survive intact with Tynecastle as an asset they're dreaming.

 

Agreed, but I wonder if there's scope for selling and renting back. I might be wrong, but I have a feeling that's what Leeds did.

 

I'm afraid I don't know enough about this to give a coherent argument - I'm just throwing some thought into the discussion.

[flecktimus]

I'm well aware of that Chip, but there really won't be any of significance other than UKIO.

 

Scottish & Newcastle

[SeeVee]

I wish people would do some basic research about financial matters before spouting a load of pesh about administration. So, for the hard of thinking....

 

Romanov would not put Hearts into administration. He would wind the company up - ie close it down. Administration would be a costlier option, so he would end up with less money. Administration does not make financial sense.

 

Rant over.

 

I thought all of Leeds' debts were owed to Ken Bates or his companies and yet they went into administration.

[jlo2]

I thought all of Leeds' debts were owed to Ken Bates or his companies and yet they went into administration.

Leeds owed money to all and sundry. Ken Bates came in after the financial collapse. He put Leeds into administration after relegation was confirmed and then 'persuaded' the majority of the debtors to accept 1 penny in the pound.

 

Elland Road had been sold and leased back much earlier.

 

Leeds got into problems originally by budgeting for reaching the CL quarter finals every year. This cost them two relagations and nearly ended the club despite the huge fanbase.

[Therapist]

I thought all of Leeds' debts were owed to Ken Bates or his companies and yet they went into administration.

 

Incorrect.

[pennantjambo]

I've been thinking...bear with me!

If Romanov were hounded out of Hearts we would certainly not be able to sevice our debt. Now this would mean going into administration, and quite likely the sale of Tynie. This would take a dirty great chunk out of the debt, we'd still be a fonancial shambles, but stay with me...

It has been shown that with the right team on the park Hearts are a highly marketable commodity. If the debt was slashed could we maybe find parties slightly less mental than Vlad to help unlock that potential?

My question really is, what are the sanctions for going into administration? Would we be docked points? If so how many? Or is it a case of automatic relegation? If it is a points deduction, then so long as we had a fairly average season in the first year could we not get away with it and be in a very strong position to build for the future? Obviously sans Tynie, but I don't think we are in a position anymore to ask for the Moon! Like I said, I'm just thinking out loud (well whatever you call that on the internet)...

 

If mad Vlad got a clear message from the fans that he were not wanted here any more and by that I mean a clear unaldulterated message that gave him no alternative but be forced into selling up. Then, after a period of no takers he may feel pressurised into taking whatever he could get.

 

Surely somewhere out there there is a strong minded enough collective of people with money including the fans to cobble the dough together to move the mad one on?

 

Even Liverpool fans looked at a similar option of a fans buy-out.

 

Its not unrealistic but if 10,000 fans/investors put in a ?1 each that would raise ?10,000 and so it goes on. Say for 10,000 fans to invest ?100 each would raise ?1 million. But say 10,000 fans invested ?1000 each this would raise ?10 million

 

Ok its the stuff of dreams but with that kind of money allied to some local or even global investors could it happen.

 

Hindsight is a wonderful thing but knowing the "potential" of the club which IMO we owe a debt of gratitude to Romanov for realising we actually had one, but if we were to turn the clock back would this have been the road to go down?

[MacDonald Jardine]

If mad Vlad got a clear message from the fans that he were not wanted here any more and by that I mean a clear unaldulterated message that gave him no alternative but be forced into selling up. Then, after a period of no takers he may feel pressurised into taking whatever he could get.

 

Surely somewhere out there there is a strong minded enough collective of people with money including the fans to cobble the dough together to move the mad one on?

 

Even Liverpool fans looked at a similar option of a fans buy-out.

 

Its not unrealistic but if 10,000 fans/investors put in a ?1 each that would raise ?10,000 and so it goes on. Say for 10,000 fans to invest ?100 each would raise ?1 million. But say 10,000 fans invested ?1000 each this would raise ?10 million

 

Ok its the stuff of dreams but with that kind of money allied to some local or even global investors could it happen.

 

Hindsight is a wonderful thing but knowing the "potential" of the club which IMO we owe a debt of gratitude to Romanov for realising we actually had one, but if we were to turn the clock back would this have been the road to go down?

 

10,000 fans investing ?1,000?

What are you on?

It's been said before but if Romanov wants to recoup some money hbe just liquidates the club.

[SeeVee]

Leeds owed money to all and sundry. Ken Bates came in after the financial collapse. He put Leeds into administration after relegation was confirmed and then 'persuaded' the majority of the debtors to accept 1 penny in the pound.

 

Elland Road had been sold and leased back much earlier.

 

Leeds got into problems originally by budgeting for reaching the CL quarter finals every year. This cost them two relagations and nearly ended the club despite the huge fanbase.

 

I sit corrected.

 

I'm almost sure there was one club down south that went into admin. owing its owners more than anyone else, so they took the biggest hit. I was thinking it was Leeds, but I may be wrong.

[Rabgee]

Surely even if the club is liquidated the name and league membership have some value to someone and that value would be realised by selling on the asset?

[pennantjambo]

10,000 fans investing ?1,000?

What are you on?

It's been said before but if Romanov wants to recoup some money hbe just liquidates the club.

 

I know Mac D J but there is a feeling of desperation and desolation in our current situation, and I think most with an affinity for the club would buy him out if they had the cash to spare.

[jlo2]

I sit corrected.

 

I'm almost sure there was one club down south that went into admin. owing its owners more than anyone else, so they took the biggest hit. I was thinking it was Leeds, but I may be wrong.

Motherwell is the nearest that I recall.

 

As has been pointed out, there is no point in adminstration if all the money is owed to one person/organization. If you are going to accept 10p in the pound why go to the (considerable) expense of employing adminstrators? You would just take the hit.

 

Administration only work to buy time in the hope of finding another buyer or to pursuade other creditors to accept a reduced amount.

 

At Gretna administration was used to extract cash from the SPL in return for completing outstanding fixtures.

[jlo2]

Surely even if the club is liquidated the name and league membership have some value to someone and that value would be realised by selling on the asset?

Yes but liquidation results in the league membership being lost. This happened with Airdrieonians and Gretna.

[MacDonald Jardine]

Yes but liquidation results in the league membership being lost. This happened with Airdrieonians and Gretna.

 

Not automatically it doesn't. If the club is sold they carry on with a 10 point penalty like Motherwell.

[jlo2]

Not automatically it doesn't. If the club is sold they carry on with a 10 point penalty like Motherwell.

That was Administration.

 

Liquidation implies that the company (club) no longer exists.

[portobellojambo1]

As far as I can work out, as VR owns the whole shooting match, as long as hes in charge administration wouldn't be a possibility as the majority of the debt is owed to UKIO Bankas. If they wan't their money back, as the majority shareholder, VR can Liquidate any assets to repay the debt.

 

Agree with this and what Therapist says, why would Romanov want to put the club into administration, it would make more sense for him to simply dissolve the company, wind it all up, convert everything into cash assets to go towards UKIO/UBiG and call it a day.

 

Someone says maybe whoever came in after Romanov could put the club into administration, that doesn't make any sense whatsoever. Anyone coming in would only be doing so because they had stumped up the cash to buy Romanov out, why having bought Romanov out would you then want to put the club in the hands of administrators.

 

The act of buying Romanov out would involve either getting the club back to square one in the first place, i.e. the price paid would have to include clearing the debt, or proving you had the means of servicing the debt, and taking it on, if you had done this why then the need to go into administration, unless you were looking to make a swift financial loss.

[portobellojambo1]

That was Administration.

 

Liquidation implies that the company (club) no longer exists.

 

A company can go into liquidation but not necessarily out of business, if new buyers can be found. There are many companies who are in liquidation at the moment but continue to function, the jobs of the liquidators is to ensure best use is made of any cash flow, while actively seeking new buyers.

 

Liquidation comes before wind up, not the other way round.

[Rabgee]

FWIW I have the feeling that the FL and the SFA would work very hard to come to some accomodation with any new owner as it would reflect pretty poorly on them if one of the bigger clubs went t!t5 up and they had just sat back and let it happen.

[WalterEgo]

All of the above notwithstanding I'm not convinced we couldn't service the debt, if it ever came to that. I haven't examined the books closely but if we shed the bulk of the high wage earners and the fans still stuck with the club it might be possible. Difficult to see how we could reduce it that way but I can imagine it being serviceable for a while. That assumes we could get someone to take it on, but any discussion on servicing debt takes that assumption as a given - arguably the worst thing that Romanov has done (possibly deliberately) is to make the club technically insolvent.