MFS administrators investigate £1.3bn in unaccounted lender funds as creditor claims exceed £2.3bn

Market Financial Solutions Limited (MFS), the collapsed London-based property lender, is facing estimated unsecured creditor claims of approximately £2.33 billion, with administrators investigating a £1.3 billion shortfall in funds advanced by external lenders that were neither loaned to borrowers nor otherwise accounted for. In their latest progress report, Benjamin Browne and Simon Appell of AlixPartners disclose significant concerns over the company's lending practices, financial records and governance, while warning that creditor recoveries remain highly uncertain.

MFS entered administration on 25 February 2026 following an application by creditors, with the administrators adopting a strategy focused on preserving and recovering the company's loan book while pursuing litigation against former directors and other parties. The company's accounts recorded approximately £190 million in loans, including accrued interest, comprising bridging and buy-to-let loans, although the administrators warn that the actual loan asset position could be considerably lower. The bridging loan portfolio had a reported book value of approximately £28.2 million, while potentially collectible buy-to-let loans totalled approximately £11.1 million, including interest. The administrators are investigating the origins of the funding and whether the company is entitled to the associated collections.

The administrators' investigations have focused heavily on the conduct of former director Paresh Raja, against whom proceedings have been commenced in the Commercial Court seeking recovery of approximately £1.3 billion for alleged breaches of fiduciary duty. The claim concerns funds advanced by external lenders that the administrators allege were neither loaned to underlying borrowers nor otherwise accounted for. Freezing orders have been obtained in England and Dubai, while the administrators are investigating additional recovery actions against other parties suspected of receiving misappropriated MFS Group assets. Their forensic review has identified more than 2,000 data sources, including over 530 electronic devices and more than 1.9 million items of data. The administrators are also cooperating with the Financial Conduct Authority, the Insolvency Service and other regulatory authorities.

The report estimates unsecured creditor claims at approximately £2.328 billion, including contingent claims from special purpose vehicles (SPVs) arising from alleged breaches of servicing agreements, amounts owed to investors and associated brokers, intercompany balances and employee liabilities. Ordinary preferential claims are estimated at £310,650, while secondary preferential claims total approximately £1.26 million. The administrators recorded receipts of approximately £21.2 million during the reporting period, including third-party administration funding, loan collections and other asset realisations, but incurred a trading deficit of approximately £1.91 million while maintaining a reduced loan-servicing operation. The company's workforce has fallen from 203 employees at appointment to seven as the administrators transition servicing responsibilities to Lenvi and pursue asset recoveries.

The administrators caution that the extent of potential recoveries remains uncertain, particularly given the ongoing investigations, litigation and difficulties reconciling the company's financial records. No dividend estimates have been provided for unsecured creditors, and the administration has been extended to 24 February 2027. The administrators expect recovery proceedings and asset realisations to remain central to the process, with any distribution dependent on the outcome of litigation, the recovery of funds and the resolution of competing creditor claims.