Eight companies linked to collapsed bridging lender Market Financial Solutions (MFS) have been placed into administration following creditor allegations of a £1.3 billion funding shortfall.
Mortgage Soup reports that a judge in London ordered the companies into administration after an urgent application by creditors Amber Bridging Ltd and Zircon Bridging Ltd.
The creditors claim that a network of companies linked to the lender’s ownership structure sits at the centre of an alleged fraud that contributed to the substantial funding gap following MFS’s collapse in February.
Court filings submitted by Zircon and Amber argue that the listed directors and owners of the companies are individuals connected to MFS co-founder Paresh Raja.
SAME ACCOUNTANCY FIRM
According to the filings, the eight companies share the same registered address as MFS and use the same accountancy firm. Creditors claim the entities may have been used to obtain funds from the lenders under false pretences.
Bridging Soup reported yesterday that MFS listed Magus Chartered as its main accountants in its most recent annual report.
The allegations build on earlier claims that emerged after MFS entered administration on 25 February.
The lender had reportedly borrowed more than £2 billion from institutional backers including Barclays and Atlas SP Partners, part of Apollo Global Management, while positioning itself as a major provider of short-term bridging finance.
Amber Bridging and Zircon Bridging formed part of the wider structure used by MFS to raise institutional funding.
HIGH-VALUE ASSETS
Court filings cited by Bloomberg state that the two companies lent around £44 million to a group of property-owning businesses. The loans were reportedly secured against high-value London assets, including a £16 million apartment and an £8 million townhouse in Knightsbridge.
Creditors allege the borrowing companies were controlled by individuals connected to Paresh Raja, CEO (main picture) while some guarantors for the loans appear to be individuals “of modest means”.
The filings also raise concerns that some properties used as security may have been pledged more than once or were not legally owned by the companies offering them as collateral.
Bridging Soup reported last month how in response to the collapse a member of the mortgage community – known to Bridging Soup – had launched a GoFundMe campaign to support affected staff and their families.
