NEW YORK ( TheStreet) -- Where does Dynegy ( DYN) go from here?

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The deal between Dynegy and leveraged buyout firm Blackstone Group ( BX) was doomed on Tuesday, when the companies announced that shareholders wouldn't support the transaction. That leaves Dynegy with a mountain of debt and operating in a power market where pricing remains weak and earnings potential for all companies is deteriorating.

The Dynegy-Blackstone proposal pitted the leveraged buyout specialists against activist investor Carl Icahn and hedge fund Seneca Capital, both shareholders of Dynegy.

Icahn and Seneca had stated that Blackstone wasn't offering enough for Dynegy, leading to a raised bid from the leveraged buyout group, from $4.50 per share to $5 per Dynegy share.

Seneca Capital has said during the battle it would offer as much as $6 per Dynegy share.

In a statement on Tuesday morning, Dynegy said, "We will immediately engage interested parties, including Seneca Capital and Icahn Associates, who may have an interest in making an offer to acquire Dynegy."

Critics of the Icahn-Seneca salvo, including Blackstone, have maintained that the end game of the activists is anything but paying more than $5 for the company. Blackstone noted in a press release during the height of the Dynegy battle that Seneca Capital was recently selling Dynegy shares at less than $3.

Dynegy shares ended trading on Tuesday at the $5 mark, on heavy trading volume of double its average volume of 7 million shares.

So is Dynegy headed into bankruptcy? Or will Dynegy end up in the loving embrace of Carl Icahn and Activist Inc.? Or does the long-rumored merchant power market Big Deal finally take place, possibly involving the still-merging Mirant ( MIR) and RRI Energy ( RRI)?

RRI Energy and Mirant are still in the process of merging their operations, but logical speculation in the power market has always included talk of a tie-up between Dynegy and GenOn, the new company to be created through the Mirant/RRI Energy deal.

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