Pioneer Credit and private equity firm The Carlyle Group have terminated their proposed scheme of arrangement, which would have seen Carlyle acquire the debt buyer. Carlyle has demanded repayment of A$165.8 million under a syndicated facility agreement.In a statement to the ASX yesterday, Pioneer said it had commenced legal proceedings in relation to the syndicated facility agreement. It said it "refuted the existence of any default".Pioneer chair Michael Smith said: "After examining the claims of breach and then consulting the company's legal advisers, Pioneer is firmly of the view that it has not defaulted on any of its financial agreements."Pioneer said that with the scheme implementation agreement terminated it was free to engage with other parties for another transaction.It also said it had commenced discussions with lenders to refinance its debt facility. Under the facility agreement with Carlyle, the loan principal is $141.6 million, due on September 20, and the interest rate is 20 per cent. Under the agreement, Pioneer must pay a minimum of nine months interest. Carlyle has calculated that the payout is $165.8 million.A source said Pioneer has had approaches on both the equity and debt fronts.Pioneer entered into the scheme of arrangement and facility agreement with Carlyle in December. At the time it was in default with its lenders, Bankwest and Westpac, following a loss that was triggered by a change to the accounting treatment of its purchased debt ledgers.The company needed to recapitalise and Carlyle appeared to be its white knight. But last month the deal started to turn sour, with Pioneer reporting that Carlyle had not finalised its offer.Last week Pioneer said that Carlyle was either trying to back out of the deal or wanted to force Pioneer to accept a lower offer.On the operational side, Pioneer said in its statement yesterday that sales of debt portfolios by banks and other lenders have been put on hold in response to the COVID-19 crisis. Most lenders said they would review their positions at the end of June.The company said: "This will increase the company's cash position but reduce its investment in debt portfolios and therefore its asset growth."Looking forward, the possible economic downturn expected to be triggered by the shutdown and employment impacts of COVID-19 could lead to attractive opportunities for ongoing investment."It said its payment arrangement portfolio was performing well, experiencing a loss rate of 3.4 per cent. For the nine months to the end of March, liquidations were $78.4 million - an increase of 1.8 per cent over the previous corresponding period.It said it had sufficient cash to continue operations.