A planned investment of £10m into the owner of Hotter Shoes has been withdrawn because of concerns over the group's current trading.
Marwyn Investment Management LLP offered a proposal to Skelmersdale-headquartered Unbound Group in April to provide £10m via an equity placing at an issue price of 10.5p per share.
However, Marwyn has now informed Unbound's board that the funding proposal has been withdrawn, "citing principally concerns over current trading".
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Marwyn Investment Management LLP has previously invested in the likes of Breedon Aggregates and Entertainment One.
In an update to the London Stock Exchange, Unbound Group said the trading environment has "remained challenging" over the first quarter of its new financial year, with "conditions worsening" compared with those outlined in its statement issued in January.
The group said: "This has resulted in Q1 revenues being lower than the board previously anticipated, offset by the board's previously notified cost reduction programme, which is on-track to deliver £2.3m of annualised savings from the group's current operating model by the third quarter of FY24.
"As such, as a result of these actions, the board anticipates that profitability for Q1 is expected to be broadly in-line with its previous expectations.
"The board is also well advanced in conducting a wider review of the operating structure of the group in order to drive growth of revenue and profits over the medium term.
"Whilst these actions are ongoing, a primary focus for the board continues to be managing cash flows very tightly given the group's continuing working capital funding constraints.
"The group has maintained regular dialogue with its core banking partners who have maintained their support throughout this period, including the waiver of certain covenants under existing borrowing facilities.
"The board considers it likely that the group will require further covenant waivers in the short-term and will continue with its constructive dialogue with its banking partners.
"The board is continuing to work with the group's advisers and banking partners with a view to raising additional funding or refinancing its existing borrowing facilities in order to provide the appropriate balance sheet structure and level of working capital headroom.
"In the meantime, the board is managing the group's working capital actively to ensure that short-term liquidity is maintained.
"To this aim, the board has appointed Interpath Advisory to work alongside the company's nominated adviser and broker, Singer Capital Markets."
The latest update comes after a knitwear and jersey brand backed away from a possible £7m takeover of the group.
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