Talks between Brazil’s Braskem SA and its creditors regarding an out-of-court debt rework have soured, with shareholders taking a proposed capital injection off the table, according to people familiar with the matter.

After meetings with creditors in New York this week, shareholders decided to go back on a pledge to inject capital into Braskem after bondholders rejected a proposal that included $3.8 billion in debt conversion during meetings in New York this week, the people said, asking not to be named discussing private matters.

Talks included a non-binding proposal of $1.4 billion in capital injections by Braskem’s shareholders Petrobras and IG4, conditional on creditors agreeing to a debt-to-equity swap. With parties remaining far apart on key terms, a potential bankruptcy protection is back as an alternative for Braskem and its shareholders, the people said.

Braskem said in a statement to Bloomberg News that it maintains regular communication with the market and that any developments will be disclosed in due course through official channels. Petrobras and IG4 didn’t immediately respond to a request for comment.