HEARTS director Sergejus Fedotovas admits he is still unsure what the implications will be for the club should majority shareholder UBIG officially confirm its “indication” of insolvency.
Fedotovas is still speaking to lawyers to determine the position of the investment firm and the club but he believes there will be some clarity from Lithuania within 30 days.
UBIG, which owns 79 per cent of Hearts, was last week named on a Lithuanian government list of firms which are unable to meet their financial obligations but the club escaped instant relegation when the Scottish Premier League ruled that did not constitute an insolvency event in its rules.
But Hearts could start next season with a 15-point deduction if UBIG’s insolvency is confirmed in court and the SPL decides such a move falls foul of its financial fair play rules.
Speaking after the club’s annual general meeting, Fedotovas told Hearts TV: “The news about UBIG was very much unexpected, something we didn’t anticipate.
“To be frank we are still trying to find out what the reality is behind it and how this will impact on Hearts.
“Pretty much we know the company has declared it’s in a position where it may not be able to meet its obligations and pay the bills. But as I understand from the Lithuanian legal background, it is something it has time to consider.
“The company has around 30 days to revoke that or take it further to the stage where it will be filing for bankruptcy or insolvency.
“It will be decided by the court whether the company will go into insolvency or not.”
Hearts could themselves lurch towards administration because of events in Lithuania, if their debts are called in.
The Tynecastle club owe £25million in total with £10million of that unsecured debt to UBIG and £15million secured debt to Ukio Bankas, which is challenging a bankruptcy order in Lithuania.
Fedotovas added: “We have had discussions with Ukio Bankas and are hopeful of positive developments that will allow this club to continue in some form to service the debt and basically doesn’t represent a significant risk to the business.”
The club have not received external funding from UBIG since early last year but they needed more than £1million of fans’ money from a share issue to avoid a winding-up order in December.
And reports from inside the AGM claimed the club was depending on £1.5million of fans’ money next season through the launch of a membership scheme, along with £1million in transfer money, although it is unclear whether this is guaranteed income from historic transfer fees for the likes of David Templeton and Ryan McGowan.
Fedotovas said: “The shareholder has funded us for many years and has been instrumental in funding most important victories and achievements since 2005.
“But we were moving to be self-sustainable. More than one year has passed since we have had any funding from our shareholders.
“We have managed some difficult times but we are looking with optimism into the future.
“There are quite a lot of positives happening in our financial situation, our costs are going down and the revenues are improving.”
Hearts are continuing to hold talks with groups who have declared an interest in buying the club.
A Scandinavian consortium has stepped up its interest while an amalgam of fans’ groups are continuing discussions. Angelo Massone, who took Livingston into administration, has previously bid for the club and has declared his continued interest.
Fedotovas insisted they would only consider offers that do not put the club at risk.
“The board needs to look into the bid, to consider the bidders, to consider the plan behind the bid, and if that is something that will improve the situation at the club then this will happen,” he said.
“But until that happens we are working hard to keep this business going forward. That’s our main strategy.
“The most important thing for us is to continue business, strengthen the team and improve our football performance.
“If there is a bidder who can propose a better solution, who will be able to support his bids with funds, and represent a better choice for fans and shareholders, then the change will happen.”
The collapse of Ukio Bankas and UBIG has come hand in hand with the crumbling of the personal finances of Vladimir Romanov, who effectively controlled the club from 2005.
Amid reports that Romanov suffered a stroke in Moscow that rendered him unable to return to Lithuania to face questions over his finances, Fedotovas said: “I have heard that he was unwell. Obviously there has been a lot of pressure and a significant change to his life with the collapse of his business.
“He is a man of significant age and obviously he is not a young boy and all this pressure does not add to his wellbeing.”