Mpr3ssive - 9:25 pm on Oct 11, 2013 (gmt 0)
Site 1 has existed since 2004. It got hit with the unnatural links penalty and rankings plummeted. Eventually, we got out of the penalty and the site has struggled since. Site 1 has good links to it and also baggage which we couldn't remove all and put into a disavow file...
Site 2 was created in 2008 for rebranding purposes and only citation links were being built to it since we planned to 301 redirect Site 1 to Site 2 eventually.
About 4 months ago we 301-ed Site 1 to Site 2. Rankings really didn't improve that much but we needed to rebrand anyway. We build links ourselves during this time such as guest blogging to relevant sites with fluff anchor text, etc.
Almost 4 weeks ago we decide to remove the 301 and see what happens to Site 2 without Site 1, because we didn't see much change and Site 1 still has baggage. October 4th arrives and poof, gone!
Google Webmaster Tools still thinks Site 1 is redirecting to Site 2.
Site 1 has been hit with previous Penguin iterations and the unnatural links and I'm thinking that all of this was being transferred via 301 to Site 2. When Penguin 2.1 arrived, it was hit as a result.
I hope this makes sense.