A judge at the Chief Insolvency and Companies Court has approved the administration of UK bridging lender Market Financial Solutions (MFS) following allegations of fraud against its chief executive.
Judge Briggs granted an application to appoint Alastair Beveridge, Benjamin Browne and Simon Appell of AlixPartners as joint administrators of MFS.
The application was brought by Amber Bridging Limited and Zircon Bridging Limited, asset-backed funding vehicles connected to MFS, both of which are already in administration.
According to reports by 9fin the applicants’ skeleton argument described the matter as urgent, citing “real and serious concerns” about the management of the company and wider group entities.
BANK ACCOUNT IRREGULARITIES
And as Mortgage Soup reported yesterday, it also referred to alleged irregularities in key bank accounts into which collections relating to the applicants’ mortgage loan portfolios were expected to be paid by MFS as servicer.
The argument further stated there appeared to be a significant shortfall in collateral supporting the applicants’ mortgage loan portfolios.
Daniel Bayfield KC, representing the applicants, told the court that one of the “greatest concerns” was that information and assets might not remain available if action was delayed. He said the chief executive, Paresh Raja, was under “deep suspicion of fraud” and had left for Dubai.
Mukesh Raojibhai Patel, an unsecured creditor with a £7.8m claim who represents a wider group of unsecured creditors holding £169m, opposed the appointment of AlixPartners.
Represented by Quastels, the group indicated it intended to seek the appointment of Stephen Katz of BTG Begbies Traynor and Nimish Patel of Coots & Boots, and requested an adjournment to submit further evidence.
Gregory Banner KC, acting for the opposing creditors, argued that a short delay would not materially change the position.
IMMEDIATE INVESTIGATION
Judge Briggs rejected the request, citing the need to avoid additional time and costs. He described the fraud allegations as “very serious” and said there was an urgent need to protect assets for creditors, referring to evidence of potential “double pledging” requiring immediate investigation.
The administration of MFS follows the recent collapse of Century Capital, another London-based short-term lender. Despite the two high-profile failures, analysts have not forecast a broader market-wide collapse.
Earlier this week the Bridging and Development Lenders Association moved to reassure the short-term lending market after news emerged that MFS had applied to enter administration, stating it would continue to monitor developments closely.
