The operator of Pod Deco, the venue held in the former Odeon cinema, on South Clerk Street, went into liquidation, leaving behind a trail of debts thought to be in the region of 100,000.
But the site of the historic cinema has been rescued as a Fringe venue for this year after another promoter stepped into the breach in time to meet the festival’s programme deadline this month.
The Evening News understands a string of performers went unpaid after the demise of Manchester-based Cyclops Events, which was only at the Fringe for the second year in 2004.
Several highly-rated acts, including Craig Hill, Des Clarke and Jimeoin, were snapped up by the company with the offer of up to 80 per cent of box office takings, way above standard Fringe rates.
It is believed poor ticket sales were the main reason for the firm’s problems, with insiders blaming "a simple lack of bums of seats", particularly during two weeks of bad weather last August.
Fringe director Paul Gudgin today confirmed C Venues would run Pod Deco at this year’s festival, but declined to comment on the fate of Cyclops Events.
C Venues - which already operates at Chambers Street, Castle Terrace, Brodie’s Close, Infirmary Street and at the Carlton Highland Hotel - is one of the biggest and most firmly-established promoters on the Fringe.
The old Odeon will be run as a Fringe venue this year despite plans submitted earlier this year to convert the site into a bar, restaurant and student flats.
Developer Duddingston House Properties has joined forces with Edinburgh University to transform the site, despite opposition from heritage watchdogs and the Edinburgh International Film Festival, which has campaigned for the site to be brought back to life as a cinema.
At the end of last year’s Fringe, Cyclops Events co-director Heidi Waddington said the firm would be aiming to be back in 2005.
But insiders say it quickly became clear there were financial difficulties.
A source told the Evening News: "It looked like they bit off more than they could chew. They just didn’t get enough people in through the doors to make it work, even though there was a pretty good programme. They didn’t appear to have done their sums properly."
Another insider said: "They treated people pretty badly."
Around 1.5 million is thought to have been ploughed into the venture last year, with Ms Waddington threatening to take on the Fringe’s "big three" promoters - Gilded Balloon, Assembly Theatre and Pleasance - and saying Cyclops would be involved in the festival for years to come.
She said at the time: "I understand there has been some ill-feeling because we came along.
"We’re not this Manchester-based company who fancy a piece of the pie."
A spokesman for Unique Business, the firm handling the assets and debts of Cyclops Events, confirmed the company had been put into liquidation.
Neither Cyclops Events nor Heidi Waddington, who ran the firm with her husband Steve, could be contacted for comment.