Owner of collapsed lender MFS hit with freezing order
The owner of a collapsed shadow bank has been hit with a worldwide freezing order after his firm faced fraud allegations.
Paresh Raja, founder of Market Financial Solutions (MFS), has been told by courts in London and Dubai to give details of all his assets worth more than £10,000 and cannot spend more than £5,000 a week without consent of MFS’ administrators.
The collapse of MFS left people who had lent it money with a shortfall of £1.3bn and put major banks on the hook – with the firm having borrowed more than £2bn from the likes of Barclays and Santander.
The freezing order was granted after applications were made by AlixPartners, MFS’ administrators.
The administrators told the Financial Times: “We welcome the granting of these applications which follow two weeks of intense analysis and investigation into the operations and affairs of MFS and Paresh Raja.
“This is an important and significant step in this very complex situation, and the support of the courts is critical as we continue our pursuit of the best possible outcome for all creditors of both MFS and its associated companies.”
More ‘cockroach’ lenders could follow
The bank’s implosion accelerated a Wall Street sell-off of financial firms and asset managers as the market braced for the discovery of more private credit lenders.
Jamie Dimon, chief executive of JPMorgan Chase, warned that more “cockroaches” might emerge in the wake of MFS’ collapse.
The firm had a loan book of £2.4bn and net assets of £15.9bn at the end of 2024, according to its accounts.
Neil Dooley, a partner at Quilton Law, said: “The key issue now is whether Mr Raja complies, as required, with full disclosure of his assets worldwide, including those held in trust or by nominees.
“He must then decide whether to challenge the freezing order or keep his powder dry and focus on defending the underlying fraud allegations.”
The collapse of MFS is set to flood London’s property market with high-end homes which were owned by companies linked to the bank.
Administrators have been appointed to oversee companies in control of around 250 homes in high-demand locations like Knightsbridge, Belgravia and Mayfair.
One of the property companies which took loans from MFS was linked to a man who recently stood trial for alleged money laundering for a crime syndicate, according to the FT.