A $41 billion deal to buy Bell Canada in what was once billed the leveraged buyout ever collapsed on Wednesday after failing a solvency test.

View a slide show of 2008's hottest tech M&A deals

The companies involved in buying Bell Canada, including the Ontario Teacher's Pension Plan and Merrill Lynch Global Private Equity, issued a joint statement terminating the deal after receiving the solvency opinion from KPMG, which was enlisted as part of the deal to evaluate the transaction.

KPMG ruled that if the deal were to go through it would result in an insolvent entity, or one unable to pay off its debts.

"Because KPMG has concluded that a required test for the solvency opinion was not met, this mutual condition to completion of the acquisition could not be, and was not, satisfied," the purchasers said in the statement. "Accordingly, the Purchaser terminated the agreement in accordance with its terms."

The purchasers also said they will not have to pay a $1.2 billion termination fee due to the circumstances of the cancellation, nor do they expect to be paid a similar fee by Bell Canada.

The IDG News Service is a Network World affiliate.