Error connecting directly to Device xx No backend with an available connection slot

I am trying connect to custom device with custom repository.
I can successfully add device to HA

Setting up Prana device 00:a0:50:ef:11:11, Password Provided: True

Unfortunately after that I get error

Attempting direct connection to Prana 00:a0:50:ef:11:11
Error connecting directly to Prana 00:a0:50:ef:11:11: No backend with an available connection slot that can reach address 00:a0:50:ef:11:11 was found
Cannot read state from 00:a0:50:ef:11:11, not connected.
Finished fetching prana (Prana 00:a0:50:ef:11:11) data in 0.029 seconds (success: False)

Thing is - I have no other Bluetooth devices connected, so ALL slots are free!
Just in case, I did check maybe it is distance issue so I moved HA temporarily about 5m from device without any change.
Also I cant find any other error logs about device so it does not make much sense.

I already know most of the stuff discussed in that chat. Unfortunately they do not have solution to specific problem I have here. Reason is that alextud and zauan repository’s discussed there actually do not support password protected bluetooth connection. My mod does (or should do).
As I described above I am in point where software accepts password protected connection but HA complains about not avail connection slot. (what is not true)
I was hoping somebody has idea why.