MK One boss Mark Brafman has left the value fashion retailer just six months after rescuing it from administration.
The departure of Brafman, along with key colleagues he drafted in to turn the retailer around, has sparked concerns over its future.
Sources close to the situation said Brafman left Jet Star Retail, the vehicle he set up to acquire MK One in May, following a “parting of ways” with his business partner Bali Singh. The acquisition had reunited Brafman with MK One, which he founded in 1985.
Singh is now heading the fashion business, which has suffered over the years as it fell behind its value peers such as Peacocks and Primark.
Documents filed at Companies House showed Jet Star Retail director and MK One buying director Dolly Deacock – who had previously spent 20 years at MK One before Baugur’s involvement and who rejoined in May – posted her resignation on October 23. On the same date, Michelle Brafman, who is understood to be Mark Brafman’s wife and was also appointed a director in May, posted her resignation. Mark Brafman was not a director because a disqualification from being a company director imposed in 2001 had not expired at the time of his return.
One source said: “Mark and his business partner have reached an agreement and they have parted company.”
At the time of going into administration, MK One owed creditors£50 million and had notched up a loss of£20 million in the year to January.
Singh is understood to have teamed up with Brafman to buy MK One from administrator Deloitte after Baugur sold it to restructuring specialist Hilco for£1. Hilco funded Brafman’s acquisition of the retailer.
According to a report compiled by Deloitte, 100 out of 172 stores as well as MK One’s intellectual property were sold to Jet Star Retail for£7.1 million.
Suggestions that Hilco, to which MK One owes money as a result of the transaction, removed Brafman were scotched by sources.
MK One also has unfinished business with Deloitte, as the rescue package also involved a deferred consideration, with funds due back to the administrator.
A source close to the situation claimed there were “significant cash flow problems and operating issues” at the retailer. However, another maintained the business was fundamentally sound.
A separate source added that “suppliers won’t touch MK One with a bargepole” after they were stung by the collapse of the business. Suppliers were told by Deloitte that unsecured creditors would receive only 1p for every£1 owed.
MK One confirmed that Brafman has left the business, but declined to comment further.