I have tetherme installed on my iPhone. I have itether installed on the iPad. I have been using this setup for at least a month and it worked flawlessly until today. Suddenly it won't connect, and gives an error stating "Daemon disconnected. The blue-pan daemon exited."
The only thing I have modified since the time it last worked, was an install of lockdown pro. I have since disabled it. I was using activator to point to the tethering toggle so that I could turn off the connection via my home button. Also interesting that although I re installed everything including the toggle... The toggle doesn't even show in sbsettings.

Update. After restoring my iPad, it still wouldn't connect which narrowed it down to the phone. What finally fixed it (although I had switched the Bluetooth on and off several times already) was: turned off Bluetooth, completed a respring, and then turned Bluetooth back on. It immediately paired and connected. An upside to this ordeal is that the speeds are faster too. Before, I was not even getting half the speed as if I were using tetherme as wifi. Most the time I would top out at well below 200k. Now my speeds are averaging anywhere between 800k- 1.2mb.

Glad you got it fixed. Amazing what on / off / respring / reboot can solve

Lol I tried those throughout the process, I guess just not the right combination! I'm usually pretty good with troubleshooting but I sure was getting annoyed :/