Diable Grande Resort owes Bank of Scotland $20 million

HE MADE his fortune through the invention of the nicotine patch, created the European Le Mans motor racing series and launched the luxury St Andrews Bay hotel in Fife.

But even US tycoon Don Panoz is not immune to the credit crunch, as court papers reveal that his upmarket vineyard, golf and housing resort in California has fallen into bankruptcy.

And Panoz’s problem is not merely something we can observe with impunity from Scotland – Bank of Scotland is owed more than $20 million (£10m) after the collapse of the Diablo Grande resort.HBOS has been named as a major creditor after the development – which currently boasts about 400 homes, but had ambitions to increase that to 1,200 – fell victim to the US housing slump.

The Edinburgh-headquartered bank forked out an extra $1m loan last Thursday to keep the development operating until mid August, according to bankruptcy papers from the Sacramento Court.

Panoz is understood to be worth about $400m. He built the five-star Fife hotel – which two years ago played host to the St Andrews Agreement talks on Northern Ireland – through his St Andrews Bay Development company.

The concept does not exist in the UK, where companies instead go into administration – usually to be broken up to salvage whatever assets are left and pay off creditors.In the Diablo Grande case, if a sale goes ahead and the company gets back on its feet, HBOS’s money could be repaid.

In 2004, Fountainhead Holdings, the parent company of the St Andrews Bay Development, sold off a 50 per cent stake in the St Andrews Bay Hotel to US firm Laup Holdings. Accounts for the year to December 2004 showed debts of £8.6m and losses of more than £5m.