A controversial deal between the BBC and entrepreneur Ed Guinan has failed, leaving the corporation owed up to £2 million.

Guinan, the flamoyant former chairman of Jellyworks, a now-defunct internet investment vehicle, took over the BBC for Business brand in a landmark deal last December.

Guinan formed Knowledge Chase, a company seeking to commercialise the BBC's production of training videos featuring celebrities such as Richard Wilson. The company bid £4m for the rights, and gave BBC Worldwide, the broadcaster's commercial arm, a 5 per cent equity stake. The project was hailed as a blueprint for attracting private investment into the corporation. BBC Worldwide had expected to increase revenues eight-fold.

Its collapse will severely embarrass the BBC and director general Greg Dyke who signed off the project.