Anyone who bought a ticket for Breakout On The Prom, which was due to take place in Kirkcaldy last month, and didn’t use a credit card or take out insurance, won’t get their money back.
And while the majority have been refunded, it is understood more than 100 people could be left out of pocket.
The news was described by David Torrance MSP as “completely unacceptable” - and he feared it could have a negative impact on any future events planned for the town.
He said: “I am very disappointed that the Breakout Festival was unable to go ahead due to poor organisation and communication.
“The festival would have been an event that pus Kirkcaldy on the map and the town has now lost out on vital business that it would have brought with it.
“My heart goes out to those who have invested their hard-earned cash for tickets to attend the event to only be told that they will not be receiving a refund.
“This outcome is completely unacceptable and the impact that it has had on any future events to be held in the area could be detrimental.”
The collapse of the company behind the event means a financial hit for some fans in the middle of a cost of living crisis.
Those affected will be at least £46 out of pocket if they bought a day ticket - and as much as £120 if they planned to attend all three days.
Breakout was cancelled just days before the first bands were due to perform on a specially built stage at the Basin on the Prom.
Breakout Events Ltd was set up to stage the music festival - the first ever staged on the Prom in the Lang Toun - and it put together a line-up which featured big names such as Goodbye Mr McKenzie, The Skids, Big Country, Midge Ure, GUN, Sandi Thom, and the Red Hot Chilli Pipers.
On May 24 - five days before the event was due to start - an application was made to Companies House for a voluntary strike off from the register.
The first Gazette notice - the official journals of record.- to strike off was lodged on May 31.
But, on June 8, documents show that the dissolution process was suspended after an objection was lodged.
Ian Arnott, sole director or Breakout Events Limited, said the company had forked out more than it took in ticket sales.
He said: “Way more money than what was received in ticket sales was spent on non-refundable deposits with all bands and artists along with a few suppliers.”
He said it was deemed that the organisers “had no option to cancel the event and liquidate, owing to still large cancellation fees in some cases, and multiple other costs”
Breakout’s original plans envisaged two stages - the main one in The Basin and a second dance/acoustic stage further along the Esplanade.
The first indication of troubles came when headliners Wet Wet Wet were pulled from the line-up just a few weeks before they were due to perform.