Dawson International, a Scotland-based manufacturer of cashmere sweaters, could become the latest UK company to be dragged down by its underfunded pension scheme after the country's regulatory authorities rejected a deal aimed at relieving it of its large financial obligations to retired staff.

Dawson, which is listed on London's mid-and-small-cap Alternative Investment Market, said it was "disappointed" that talks with the Pensions Regulator and Pension Protection Fund had failed. The bodies "rejected all offers made by the company", it said, and it could now face bankruptcy.