THE company behind the massive Caltongate development today blamed planning delays for crippling the scheme and causing it to plunge into administration.
Mountgrange Capital said it had spent £5 million over the past four years trying to get the £300m project through the planning process. And it said that, if the process had taken the two years scheduled, the project would have gone ahead as planned.
It came as urgent efforts were under way today to rescue the controversial vision for the area.
The news of Mountgrange Capital's slide into administration comes just over a month after the Evening News revealed that the company was battling for survival after recording a £24.3m loss.
Following the administration, the Caltongate site will now become the property of Deloitte, which is to market it to potential investors.
Directors of Mountgrange today insisted the scheme still had "commercial merit" but property experts say there are few that will have the cash available or are able to get the lending to make the vision a reality.
Mountgrange spokesman Mark Cummings said: "The planning delays have led us to entering the market at the worst possible time.
"Mountgrange has spent a considerable sum of money just acquiring planning consents."
He added: "Our project was based on a two-year planning cycle, not a four-year planning cycle. Had we been able to come on stream in two years it is highly likely we would not be in the situation we are today."
The firm admitted that "heritage-led" planning concerns had slowed the process but said that the city council and Scottish Government had made sure there was no doubt that the scheme was right.
A major reason that Mountgrange Capital went into administration was its inability to secure further funding from the Bank of Scotland, to which it already owes £70m.
Insiders at the company are understood to be angry that the terms available to it have worsened considerably since the bank, part of the Lloyds Banking Group, signed up to the Government's bail-out.
John Reid, the joint administrator from Deloitte, said the company's assets still represented "major development opportunities". However, Stewart Taylor, a city-based director at property firm CB Richard Ellis, said finding a buyer would be "very difficult".
Cllr Tom Buchanan, the city's development leader, said: "Banks are not being encouraged to help companies like Mountgrange through these difficult times."
Meanwhile, a separate company also owned by Mountgrange directors Martin Myers and Manish Chande is also believed to be keen to start talks with Deloitte about buying back Caltongate.
Sally Richardson, of the Save Our Old Town campaign which fought the development, said: "This won't hurt the likes of Manish Chande but the whole mess does affect the people who live in the Old Town."
A SIX-YEAR STRUGGLE2003 Developer Mountgrange purchases the Caltongate venture gap site from Sofam.
2005 A then £180 million plan to create cafés, restaurants, flats, shops, offices and a five-star hotel is unveiled.
2006 Objectors begin campaign to stop the development as concern mounts about the plans. A masterplan for the site is approved by the council.
2007 Fears about the effect of the development on the World Heritage Site prompt Mountgrange to unveil some slight alterations.
2008 The council approves the Caltongate scheme despite 1800 objections from around the world.
2009 Mountgrange Capital goes into administration, leaving the future of the development uncertain.
