Creditors of Market Financial Solutions (MFS), the UK bridging and mortgage lender that collapsed into administration amid fraud allegations, are reportedly facing a shortfall of more than £1.3 billion, according to court filings in London first reported by Bloomberg. The figure is substantially higher than earlier estimates.
In the filings, creditors alleged that eight companies presented as “genuine borrowers” from MFS were in fact “closely connected” to the firm’s owner, Paresh Raja. Those borrowers were placed into administration by a court following an urgent application by two creditors, Zircon Bridging Ltd and Amber Bridging Ltd, which are themselves already in administration. The creditors alleged that their losses stem from “improper and potentially fraudulent conduct,” including lending to related borrowers and the “double-pledging” of collateral — using the same asset to secure multiple loans from different lenders.
Raja denies wrongdoing. His lawyers have said that mistakes were made but that there was no intention to defraud. The allegations have not been tested or proven in court, and the matter remains the subject of legal proceedings.
How the lender operated
The Mayfair-based company, founded in 2006, marketed itself on speed, claiming it could deliver loans as large as £50 million in as little as three days. Major financial institutions — among them Barclays, Jefferies, and Apollo’s structured-credit arm, Atlas SP Partners — are reported to have provided more than £2 billion of funding to MFS. According to the filings, a major lender began blocking transactions involving the firm after discovering irregularities and later froze the related accounts, before the company’s collapse accelerated sharply over a matter of weeks.
Regulatory scrutiny and wider impact
The UK’s Financial Conduct Authority has opened an enforcement investigation into MFS following its insolvency, and officials overseeing the wind-down have obtained court orders, including a worldwide freeze on Raja’s assets and a travel ban; he is reported to have left the UK for Dubai. The episode has drawn attention on both sides of the Atlantic to underwriting standards in the fast-growing market for asset-backed lending, coming after the high-profile failures of US firms such as Tricolor and First Brands Group.
What to watch
Key questions remain unresolved. Creditors are still working to establish what their collateral is actually worth given the double-pledging allegations, and the size of the eventual shortfall could change as the administration proceeds. Because the central allegations are contested and the regulatory investigation is ongoing, the claims described here are allegations rather than findings, and the outcome will depend on the courts and the FCA’s inquiry.
