LONDON — Negotiations have collapsed for the sale of Handmade Films to Rubicon, the U.S.-based investment vehicle of two Indian entrepreneurs.

This failure means that the London-based sales company is back on the open market after a period of exclusive negotiations with Rubicon.

Rubicon spent several weeks in due diligence after making a substantial initial offer for Handmade (Daily Variety, May 17). But earlier this month Rubicon submitted a drastically reduced final bid, which was rejected.

Handmade, founded by ex-Beatle George Harrison, has been owned since 1994 by Canada’s Paragon Entertainment Corp. But Paragon itself has been up for sale since last fall, and filed for creditor protection this spring.

The collapse of negotiations with Rubicon over Handmade prompted Paragon’s remaining directors to resign last week. This in turn triggered Paragon’s three main creditor banks to push the company into administrative receivership.

The banks have now authorized a fresh and more formalized attempt to put Handmade up for sale, which will be launched in the next couple of weeks.

Handmade’s main asset is a library of 33 films, including 23 from the Harrison days such as cult classics “Mona Lisa,” “Time Bandits” and “The Long Good Friday.” The company’s current slate includes “The Man With Rain in His Shoes” and “The Secret Laughter of Women.”