How to handle tough situation - what do you do?

Not an Interview question: You're given a project, you execute project to MD's liking, you present project to team, you receive praise from team and MD, end loop. Your team member takes your project without your knowledge, works on it in their own time, makes it look sexier and generally better. Your team member sets up private meeting with MD, presents it, MD loops you into meeting saying we're gonna scrap your version and go with team member's version + "You did great a job getting this off the ground" BS. What do you do and how do you react?

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