Holders of Twin Butte Energy Ltd.’s debentures have rejected a takeover bid for the Canadian oil producer by Hong Kong-based Reignwood Resources Pte. Ltd., throwing the debt-hobbled company’s fate into limbo.

The debenture holders had complained that Reignwood’s offer for their securities, at 14 cents on the dollar, was vastly below what they were worth. Only 31 per cent of the debtholders voted in favour at a meeting in Calgary on Monday.

The rejection means the deal can be terminated by either Twin Butte or Reignwood. A forbearance agreement with lenders was also conditional on approval by both shareholders and debt holders, meaning banks can now accelerate repayment of Twin Butte’s debt of roughly $223-million.

Twin Butte had warned that rejecting the offer could land the company into receivership.

The suitor had also offered 6 cents a share for Twin Butte stock. Holders of 78 per cent of the shares voted in favour of the offer.