Administrators investigating the collapse of Market Financial Solutions are focusing on internal lending records, collateral reporting and company accounts as they attempt to account for billions of pounds borrowed from banks and private credit lenders by the business founded by Paresh Raja.
Court filings lodged at London’s High Court allege the specialist property lender maintained internal mortgage records that did not match the scale of borrowing raised from creditors.
According to the lawsuit filed by administrators acting on behalf of creditors, one internal spreadsheet allegedly recorded approximately £1.18bn in outstanding mortgages alongside about £173mn held in corporate bank accounts, despite lenders having provided approximately £2.6bn to the company.
The administrators allege at least £1.27bn was misappropriated from the business before it entered administration earlier this year.
The allegations have added to scrutiny around underwriting and collateral verification practices inside parts of Britain’s specialist bridging finance market, which expanded rapidly during years of strong investor demand for higher-yield property-backed lending.
The lawsuit alleges some lenders financing MFS were told loans had been secured against the same properties multiple times, while in other cases purported loans may not have existed at all.
Banks including Barclays and private credit groups linked to Apollo Global Management were among lenders exposed to the collapse, according to the Financial Times.
Court filings also allege Raja and his wife received more than £408mn into personal accounts in jurisdictions including the UK, Monaco, Singapore and the UAE from funds connected to the business.
Administrators further allege company money was used to acquire UK residential properties through nominee structures acting on Raja’s behalf.
Lawyers representing Raja dispute the allegations. A spokesman for Raja said he “strongly denies the allegations” and “has consistently maintained there was no fraud or dishonesty”.
The spokesperson said assets described by administrators as missing were held through nominee arrangements for the benefit of MFS and its creditors, adding that this position had previously been explained to administrators.
The lawsuit also alleges tens of thousands of files were deleted from the company’s Dropbox account shortly before the administration process began. According to the filing, some deletions were linked to an account associated with Raja’s email address.
Administrators also allege Raja instructed employees on multiple occasions to transport envelopes and boxes containing large amounts of cash.
One allegation in the lawsuit describes an employee collecting a box containing £150,000 in cash in 2022 without explanation regarding its purpose.
Raja is currently in Dubai and is subject to a worldwide freezing order and travel restrictions, according to the court filings. Administrators allege his disclosures in response to the freezing order were “inaccurate and incomplete”.
The spokesman for Raja said his ability to assist had been hindered because administrators refused access to company and personal data despite repeated requests.
The administrators’ lawsuit alleges Raja failed to explain what happened to large portions of the missing funds. According to the filing, when lawyers acting for Raja were asked where the money had gone, they responded: “God only knows.”
