A private company bidding to run some of Cornwall Council's services has pulled out following the ousting of the council leader, its deputy has claimed.
BT and CSC were in the running for contracts to run services including libraries, and benefit payments.
Independent councillor Neil Burden would not identify the company.
Conservative leader Alec Robertson was removed following a no confidence vote. One union leader called the deal "dead in the water".
Mr Robertson was replaced by Conservative councillor Jim Currie, who had previously left the cabinet in protest at plans to involve private enterprise.
Speaking on BBC Radio Cornwall, Mr Burden said: "One of the bidders no longer wants to engage with Cornwall Council because of what happened yesterday."
'Business goes on'
Mr Currie, said: "I can't tell you anything at all about that. That is part of negotiations that are going on.
"I am sure things will emerge today, and all will be revealed later."
A report to the council claimed the joint venture contract would save at least £2.5m a year.
But the no-confidence vote was held over the decision to push ahead with the plans, which the full council had voted against.
One of Mr Currie's first duties in his new role will be to fill gaps left in the council's cabinet.
Julian German, Chris Ridgers, Steve Double and Graeme Hicks resigned from the cabinet after Mr Currie's appointment.
Mr Currie said: "Business goes on. I hope to fill all the posts as soon as possible, possibly by the weekend."
He will only be in post for about six months, as he is standing down at the next full council election in May 2013.
Stuart Roden, from the union Unison, said the privatisation plans would not now go ahead.
He said: "To end up with one tender would make it unviable to proceed. For practical reasons I think it's dead in the water."