Plans by Marlborough International chief executive Mr David McKenna to take the recruitment company private have collapsed and have been followed by the resignation of Marlborough's two independent directors - acting chairman Mr Clive Brownlee and Mr Irial Finan.

A spokesperson for Marlborough refused to elaborate on a short statement. But there was speculation last night that either the McKenna-led management group had failed to find finance to buy out the 55 per cent of the company held by outside shareholders or that the two independent directors had lost confidence in Mr McKenna and chose the collapse of the management buyout as an appropriate time to step down.

Mr McKenna bought Marlborough for just £6,000 (€7,623) in 1992. Since it floated in late 1997, Marlborough has been a dismal performer. The shares were floated at €1.22 (96p) and 39 institutions invested in the company, including most of the Republic's major fund managers.

Mr McKenna raised £4 million by selling shares in the flotation, while Marlborough staff bought 350,000 shares at a cost of £336,000.

Within a few months the shares had rocketed to a high of €5.35 before falling steadily over the past two years to their current level of €0.38. This values Marlborough at less than €12 million, and the 55 per cent of the company not held by Mr McKenna at €6.6 million.

Since it became a public company, Marlborough has spent more than €30 million on acquisitions including Walker Hamill in the UK and the Ann O'Brien and Kingston Technical businesses in Ireland. Its reputation was dented last year when it was forced to abandon the takeover of US auctioneering website e-Pawn.com after e-Pawn's chief executive was arrested for securities fraud and the shares were suspended by the SEC.

This year has seen a number of profit warnings from the group, partly due to the downturn in recruitment but also to a €3.5 million bad debt resulting from failures in the group's debt control, while there was a €350,000 write-off against the fillthejobs.com subsidiary.

Analysts forecast losses of €1.5 million in 2001.

It remains to be seen how Mr McKenna and newly-appointed executive chairman, Mr Des Richardson, will manage the firm going forward. Only last July, Mr McKenna made it clear that remaining a public limited company was not his ideal option.