The founder of luxury lingerie retailer Agent Provocateur has criticised the sale of the company to Sports Direct as "a disgrace to British business".
Joe Corre accused 3i, the private equity group that oversaw the lingerie chain's collapse into insolvency and its subsequent sale to Sports Direct owner Mike Ashley, of deliberately managing the business into administration in order to avoid debt obligations.
Agent Provocateur was sold via a pre-pack administration on 2 March to Four Marketing, a London-based branding agency that is one-fourth owned by Sports Direct.
A pre-pack insolvency is a bankruptcy procedure in which a buyer is found in advance of a company declaring its insolvency.
The Financial Times newspaper reported that an unnamed bidder had offered more money for Agent Provocateur than the £30m ($37m) Ashley paid to acquire the business.
"The pre-pack arrangement between 3i and Mike Ashley's Sports Direct is a disgrace to British business up there with Sir Philip Green's shocking behaviour over BHS," Corre told the Guardian.
"If this preposterous deal goes ahead with Mike Ashley, 3i and their partners are going to face a phenomenal swath of litigation actions. 3i's reputation is going to be left in tatters. I don't think they will ever recover from this. This is a phenomenal stitch-up.
"Just how 3i have decided the right business model is to deliberately road crash the business to wipe out anything owed to creditors or the taxman is quite unbelievable, when a higher offer on the table avoids them taking such action. This is bad practice at its worst."
However, a spokeswoman for 3i insisted that the firm did not have a role in the selection of the buyer and did not expect to make any recovery from the sale.
"Quadro Capital were one of the parties who expressed an interest but were unable to satisfy Alix Partners as to the viability of their offer," she told the Times.
Restructuring firm Alix was appointed by 3i to see through the sale of Agent Provocateur.
Simon Borrows, chief executive of 3i, told FT that the decline of the lingerie retailer had been precipitated by "inconsistent" store expansions, weak spending and accounting problems.