A DECISION to strip the former Edinburgh Filmhouse premises of its alcohol licence has sparked fears it will be turned into “luxury flats” and never re-open as a cinema.

Administrators were called in following the collapse of Centre for the Moving Image (CMI), which ran the independent cinema until last October.

They are now working to find a new buyer for the picturehouse, and said that could happen faster if the licence transfer was approved.

The council’s licensing board heard on Monday that the administrators had failed to request a transfer of the building’s licence in time, however, and argued there was “not enough justification” to grant it.

The decision was slammed by one councillor who said it created a “real risk” the cinema will be sold to private developers and converted into “luxury flats”.

Greens councillor Chas Booth said after the meeting: “I’m extremely concerned the decision not to allow the Filmhouse licence to be transferred might make it more difficult to re-establish a cinema on this site.”

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After missing the deadline by six weeks, a lawyer appearing on behalf of the administrators had pleaded with the council to approve a late transfer, saying it would help resolve uncertainty around the Filmhouse’s future “more quickly”.

Administrators Tom MacLennan and Chad Griffin of FRY Advisory Trading were appointed to assess CMI’s future after the charity stopped trading amid a “perfect storm” of financial difficulties last year.

Since then they are reported to have received more than a dozen bids for the building, including from a group of former employees who launched a crowd-funder, but a buyer is still yet to be confirmed.

Estate agent Savills said in December it would make an announcement in the new year, however the process could now face setbacks due to the cinema losing its alcohol permit.

Explaining why the application to have the licence transferred from CMI to administrators was late, Alasdair Sutherland, a lawyer working on their behalf, said they “had a change of mind in terms of what’s in the best interests of the creditors”.

He said: “There’s only so much I can say in relation to what is happening with the administrators. The Filmhouse in boarded up just now, the administrators don’t want that to continue any longer than has to be the case.”

Sutherland said a new operator for the Filmhouse would be confirmed “more quickly” if the licence was retained.

"I can’t go into specifics,” he added. “They want to deal with this as quickly and efficiently as possible. It’s currently a boarded-up building on Lothian Road – nobody wants to see that.

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"They want to deal with it and they think it’s in the best interests of administration and best of the creditors that it’s transferred.”

However, licensing board convener, LibDems councillor Louise Young, challenged why an application was not made in October “to keep all options on the table”.

She said: “Basically, what you’re saying is you’re not aware of any reason why the administrators chose not to submit a £40 application. I’m sympathetic to the fact that there are active negotiations going on – I get that – but equally we are being presented with justifications that can then cannot be given any kind of substance.

"So to be saying that it is in the best interests of creditors, but then not being able to tell us why it’s in the best interests, I feel is making our situation extremely difficult. We’re being asked to do a lot on faith.”

Young argued there was “not enough justification to grant exemption”.

The Greens’ Chas Booth said: “My real concern is that if we refuse this application today that one or more of the bids potentially before the administrators for this building to operate as a cinema may fail on the basis we have not granted this application.

"The crucial issue for me is what is in the best interests of the Filmhouse – and it is not in the best interests of the Filmhouse to convert into luxury flats or god knows what else.”

Councillors voted 7-2 in favour of refusing an exemption to the late request, meaning if the building’s new owners want to continue serving alcohol they will have to lodge a fresh application with the council.

Young said: “They missed the deadline by six weeks and they didn’t engage during the period, or even the six-week period that followed, about why the situation has changed.”

Cllr Booth said following the meeting: “The council has previously said they would explore every possible avenue to support the Filmhouse, and yet when the licensing board was asked to do this, they refused.

"There seems to be a mismatch between council words and deeds here. The Filmhouse was a jewel in Edinburgh’s cultural crown, and I very much hope the loss of their licence will not prevent it returning in some form.

"But with this decision I think there’s a real risk we’ll get luxury flats instead, which would be a massive blow to Edinburgh’s cultural sector.”