Protracted negotiations between the creditors of bankrupt Kumho Tire and prospective owner Qingdao Doublestar have reportedly hit a major snag as the creditors rejected the Chinese company's demand for a lower price for a controlling stake.

The Korea Herald reported that if the Chinese firm refuses to renegotiate, the deal is terminated automatically.

"We were not able to accept, because Doublestar made an excessive demand," said an official representing one of the creditors, including the state-run Korea Development Bank, the Herald reported.

The newspaper noted that Doublestar has signed a contract with the creditors to buy a 42.01 percent stake in Kumho Tire for 955 billion won. However, it has now said falling profits make teh firm worth less and it has demanded a cut in the sale price to 800 billion won.

The report added that creditors also agreed to request that Kumho Tire's management submits a self-rescue plan for the ailing company.