They didn't renege on the deal, the deal simply didn't go ahead.
C&G were always part of the planned 'Project Verde' spin-off. While the forced sell off was rumored Lloyds put out word that they intended to completely close the C&G network in a vein attempt at avoiding the need for a sell off.
My understanding is that HBOS' architecture was both newer and generally better than Lloyds', but obviously the task of converting HBOS' systems to Lloyds was considered smaller than moving Lloyds to HBOS. The TSB sell off (however it happens) is going to be somewhat marred by the unavoidable and no-doubt preposterous cost which Lloyds will attach to 'rental' of their IT system, at least until they can fully move away.