The company said 59.38% of shareholders voted against the debt-for-equity swap deal, which would have seen about 95% of the business handed over to lenders.
READ: Interserve's largest shareholder reportedly floats prospect of takeover bid ahead of rescue deal vote
US hedge fund Coltrane Asset Management, which holds a 27.7% stake in Interserve, was among those opposed to the deal.
Interserve said it would now apply to the High Court for the business to be placed into administration.
Ernst & Young – which is lined up to become the administrators of Interserve –is expected to apply for a pre-pack insolvency administration of the company.
This is an insolvency procedure under which a company arranges to sell its assets to a buyer before administrators are appointed.
This move would wipe out shareholders, giving full control of the business to lenders.
However, it would mean the company could continue trading and avoid the same fate as rival Carillion, which collapsed early last year with a massive debt pile.
Ahead of Friday’s vote, Sky News reported that Coltrane had written to EY to urge them against a pre-pack insolvency deal.
The investor demanded EY conduct a comprehensive marketing process for the firm and its assets while raising the possibility it would explore a takeover bid.
The construction, cleaning and catering contractor’s ill-fated move into creating energy from waste resulted in hefty losses and contributed to a net debt of £630mln.
Interserve is one of the government’s largest contractors. Its contracts with the government include cleaning and maintenance for schools, hospitals and railway stations, as well as work for the Ministry of Defence and the Armed Forces.