Collapsed lender MFS’s insolvency process to cost over £50m

Administrators to Market Financial Solutions (MFS), the lender which collapsed in February amid allegations of fraud, believe it will cost more than £50m to oversee an insolvency process which could take years to conclude.

MEZIESBLOG has learnt that AlixPartners, which is acting as administrator to the principal MFS entity at the centre of the group, has told insolvency practitioners across the City in recent days that the process is likely to rank among the most expensive of its kind in Britain in recent years.

AlixPartners, which was drafted in shortly before MFS collapsed, is now working to recover as much of the roughly £1.3bn owed to creditors as possible.

Sources believe the process will become mired in litigation between some of the mass of stakeholders which had an exposure to MFS.

Among them were Barclays, Santander, Elliott Associates and an asset-backed lending unit of Apollo Global Management, the giant US-based investment group.

Administration processes which incur costs running to tens of millions of pounds are unusual but not unprecedented in the UK.

One source said that AlixPartners’ estimate reflected the sheer complexity and time demands likely to be required to conduct investigations into MFS’s directors and seek recoveries for creditors.

Many of the lenders with direct lending exposures in different  corporate vehicles have appointed other insolvency practitioners to oversee their winding-up processes, which will incur additional fees for their administrators.

MFS was founded by Paresh Raja, who reportedly owned the business along with his wife.

The company provided mortgages on prominent London homes as well as overseas properties, with the Financial Conduct Authority now investigating the circumstances which led to its collapse.

AlixPartners declined to comment.