Baugur, the Icelandic investment group, has sold the MK One fashion chain to a retail restructuring specialist.

After a fortnight of speculation over the future of the business, which runs 172 stores across the UK, Baugur revealed it had agreed a deal with Hilco for an undisclosed sum.

Baugur insisted that Hilco had taken the chain on as a going concern but the move is unlikely to quell fears that jobs could go.

When Hilco took over Allders three years it put the business into administration though later saved 30 stores.

Gunnar Sigurdsson, Baugur chief executive, said: “MK One no longer fits into our retail portfolio and we are pleased to announce a sale.”

The Times revealed last month that Baugur was looking for a buyer in its first major disposal since arriving in the UK market eight years ago.

The group owns more than 20 high street retailers including Hamleys, Goldsmiths the jewellers, and Iceland, the supermarket chain.

However MK One has been hit hard by the downturn on the high street and ran up losses of £17.4 million last year.

Suppliers threatened to serve a winding up order on the chain earlier this month after not being paid for December. One source yesterday said that head office staff were this week having to help tidy the stores as no cleaners had been hired.

Baugur has been considering an acquisition of Moss Bros, the menswear retailer, for the past nine weeks.

It is thought the Moss Bros board could force to declare whether it will make a formal bid by asking the Takeover Panel to issue a ‘put up or shut up’ notice next week.

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