West Yorkshire-based Maramar Holdings bought the Buccleuch Street site in 2017 and wants to turn the Victorian mill into high-end apartments for over-55s.
But the firm last week threatened to walk away from the town and invest elsewhere, branding Scottish Borders Council’s planning procedures “farcical”.
Plans for the first phase of the development – to create 10 two-bedroom apartments in the former production area and yarn store – were submitted to the council last April.
But with that application still to be decided, Maramar says it will walk away if the process drags on much longer.
A spokesman for the firm said: “We had to employ an independent surveyor to show all the costs and anticipated selling prices after the council decided they wanted contributions per apartment.
“We sent these calculations to the council two weeks before the Christmas shutdown and didn’t even get a response.
“We have chased this up, and the council now want another surveyor to check the calculations. This is obviously turning into a farce.
“If we do not receive the required planning permissions by the end of January, we will no longer look to develop the site and move on to our next project in another town.”
He added that the empty mill is regularly getting broken into and vandalised.
“We will need to board it up if we do not go ahead, which will not look good,” he said.
Raising the issue at Hawick Community Council’s meeting on Monday, French Wight said: “I was quite alarmed to hear about delays in the Pesco factory conversion.
“I am really concerned that if this company has to walk away, it would leave us with a derelict building, and that would be a disaster.”
Hawick and Hermitage councillor Watson McAteer admitted he was concerned that the private firm would turn its back on the project.
He told members: “I hope we can solve this issue, but quite honestly I’m worried.
“The main issue for him is that he submitted final documentation on the November 8 and nobody had been in touch.
“He is very concerned with the amount of time it is taking.
“I met with senior planning officers last week to try to ensure this building is not allowed to become a derelict wasteland, which is a likely outcome unless the developer can encourage council officers to engage with him.
“The council officers promised to make contact with the developer to hopefully get this project back on track.”
He added that the council must do “everything in its power” to facilitate the development.
“Hawick folk want to see this historical building at the southern gateway of our town brought back to life and welcome the input from a private investor to make this happen,” Mr McAteer said.
“We must do all in our power to help this development take place or we face the prospect of an iconic building rotting away before our eyes.
“This building has been subjected to numerous break-ins and vandalism, all at a cost to a developer who is quite rightly running out of patience.”
Hawick and Denholm councillor Stuart Marshall is also calling on the council to treat the application “with the utmost urgency”.
He said: “It’s very concerning to think that on one hand we have a possible multi-million-pound investment for this derelict building and on the other hand the development is potentially being put at risk and could even be shelved.
“The last thing our town needs at the moment is yet another run down eyesore on the gateway into Hawick.
“The developer deserves much credit for recognising the huge potential that this historical building has, and the council must now take moves to accelerate its development.”
Scottish Borders Council has insisted that it does want to see the building brought back into use.
A spokesperson for the authority said: “This is a building that the council wishes to see brought back into use and so the principle of the development is something it is very supportive of.
“However, there are some matters of detail that have required resolution and which have taken some time to resolve, including in relation to flood risk and protected species.”