Scottish Government: Hotel fire demolition delay claim ‘categorically untrue’

Its emphatic rejection of criticism came just a day after residents aired their frustrations at the time taken to begin work tearing down the historic landmark after the devastating blaze on August 17.

The town’s main road remains closed with a significant impact on businesses on the A915 – the main route from Leven and Kirkcaldy to St Andrews.

The Scottish Government is the secured creditor on the site after the developer, Kapital Residential, went into liquidation.

It gave the business £850,000 COVID emergency funding, and is due an estimated £700,000 – with the former hotel the asset it was placed against.

The liquidator, Claire Middlebrooks, told residents she was in daily contact with the Scottish Government, but said progress had been difficult.

She said of the Scottish Government: “It hasn’t been clear in its position.”

That brought a robust response today.

A spokesman for the Scottish Government – which wasn’t invited to the public meeting, convened at short notice – said: “It is categorically untrue to claim that the Scottish Government is delaying demolition of this building.

"Arrangements for demolition are the sole responsibility of the liquidators. They asked for our views on August 22, and we replied the same day, stating unequivocally that we have no objections to the building being brought down.

“Our SME liquidity fund was brought in to provide urgent support to small and medium-size house builders during the pandemic, helping to ensure homes could continue to be delivered despite the intense difficulties for the sector at that time.”

The Scottish Government stressed the loan was granted to Kapital Residential Limited to address short-term liquidity issues rather than to support any particular development – Kapital was developing three sites at the time it received the funding.

It said, as with all applicants, thorough due diligence checks were conducted on the business before its application was approved.

The devastating fire saw the landmark building left in a dangerous state, resulting in the immediate closure of the A915 through the town, and major diversions in place.

Wendy Chamberlain, MP for North-East Fife, who attended the meeting, hit out: “If this were happening outside the First Minister's residence or in the middle of a city centre, we would not be in this situation.”

She was among a 160-strong turnout at a public meeting held in town yesterday which left the agencies in no doubt that residents and businesses wanted action - and answers.

It held to account Fife Council, the police and the liquidator as it pressed for immediate steps to get the town back to normality.

The liquidator appointed to oversee the demise of Kapital Residential is in daily talks with the Scottish Government as secured creditor.

It described progress as “difficult” and Claire Middlebrooks, liquidator told the meeting: “It hasn’t been clear in its position.”

She has taken legal advice on the other actions were open to her to get things moving, and that could include court action.

The liquidator cannot proceed until it has a decision from the Scottish Government, and that means demolition teams can’t get started - and that means the road can’t re-open until the building comes down.

Ms Chamberlain has now written to the Scottish Government to urge them to “fully engage” with the liquidator.She said: “This is utterly shocking. The fire and ongoing disruption are causing enormous distress to local residents. Over 100 of them were present at a community meeting this afternoon where they were told that the government is not giving a “firm response.”

“If this were happening outside the First Minister's residence or in the middle of a city centre, we would not be in this situation

“On top of all this, the loan provided by the Scottish Government was never fully repaid and it was given out when the government never bothered to check the company’s most up-to-date accounts.

“It has adopted an unbelievably blasé approach to people’s time and money.

“That’s why I have written to the government to urge them to fully engage with the liquidator, demolish the building and bring this sorry mess to a swift conclusion.”

Two 15-year-old boys have been charged in connection with the fire.