Sounds like a bug. Small chance you are using the wrong terminology and are not describing correctly what is happening so to check this, here is what I understood from you:
you have 3 people A, B and C
A calls B
A speaks with B
A wants to warm transfer to C (B goes on hold)
C doesn't pick up / reach C voicemail / C picks up but declines transfer and disconnects
at this point expected is:
A is active on the call (B is still on hold)
A should be able to take B off hold and continue call
what actually happens is:
A, B and C are all disconnected
If I got everything right, meaning I understood you correctly, then you should reach out to support.
When I mentioned earlier you might be mixing up terms when describing the issue, I was referring specifically to simultaneous ring groups. If you have them set up on your account, they might look similar to what you are describing if you are not aware of some of their quirks and how to use them.