The master sales agreement had been concluded with suspensive conditions, foremost among them agreement with the Croatian Agency for Deposit Insurance and Bank Restructuring (DAB) before the end of 2016.

The buyer agreed to an extension until the end of January but "because the dispute between Cimos and DAB is still not resolved [the buyer] is withdrawing from the transaction," according to a statement on Monday by TCH Cogeme, the Palladio Finanziaria subsidiary that acted as the actual buyer.

The move comes after weeks of uncertainty over the 1990s debt that Cimos had incurred in Croatia and which DAB, a type of bad bank, had taken over from a commercial bank.

The standoff had appeared to be resolved at several points, but problems kept popping up in talks featuring the Slovenian and Croatian bad banks and both governments.

First, the negotiators were unable to agree on the price at which the debt, worth EUR 20m when it was taken out in the 1990s, would be valued.

When the price was agreed, reportedly EUR 7m, to be paid by the Slovenian bad bank, Croatia raised concerns about what it perceived as lax covenants regarding the fate of workers and suppliers at Cimos's Croatian subsidiaries.

The two sides then resolved the covenants, but another issue cropped up, deeds on land owned by Cimos in two locations in Croatia, which are being challenged by the Croatian state attorney's office.

News portal Siol.net reported today that Italian buyers were fed up with the negotiations and decided to call it quits.

The sale was seen as vital to the survival of Cimos, which is in good shape following a EUR 168m debt-to-equity conversion in 2014, but has had trouble securing new long-term deals in the absence of a strong owner.

The fate of about 4,000 workers, over a quarter of that in subsidiaries in Croatia, now hangs in the balance.

Cimos, which is seated in the town of Koper, is one of the largest industrial companies in Slovenia. A calculation made by the central bank in 2013 showed its bankruptcy could shave over a percent off Slovenia's GDP.