A judge at the Chief Insolvency and Companies Court has approved the administration of UK bridging lender Market Financial Solutions (MFS), following fraud allegations against its chief executive.
According to 9fin, Judge Briggs granted an application earlier today to appoint Alastair Beveridge, Benjamin Browne and Simon Appell of AlixPartners as joint administrators of Market Financial Solutions.
The application was brought by Amber Bridging Limited and Zircon Bridging Limited, asset-based finance funding vehicles connected to MFS, both of which are already in administration.
According to 9fin, the applicants’ skeleton argument stated: “This Application is urgent because there are real and serious concerns about mismanagement of the Company and entities in the wider Company group.”
It continued: “…there is evidence of serious irregularities in the management of the key bank accounts into which collections in relation to the Applicants’ mortgage loan portfolio are supposed to be paid by the Company as the servicer entity in the group. There also appears to be a significant shortfall in the Applicants’ collateral for their mortgage loan portfolio.”
The website reported that Daniel Bayfield KC, of South Square, representing the applicants, told the court that one of the “greatest concerns” was information and assets not being available the longer the situation continued. 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 file a competing application seeking the appointment of Stephen Katz of BTG Begbies Traynor and Nimish Patel of Coots & Boots, and asked the court to adjourn the matter to allow further evidence to be filed.
Gregory Banner KC, of Maitland Chambers, acting for the opposing creditors, argued that a short delay would not materially alter the position.
Judge Briggs rejected the request, in order to avoid wasting time and costs, adding that the fraud allegations were “very serious” and said there was a need to protect assets for creditors quickly, referring to evidence of potential “double pledging” that required urgent investigation.
DOUBLE WHAMMY
The administration of MFS follows the recent collapse of Century Capital, another London-based short-term lender. While these two high-profile failures have rocked the bridging sector, a wider market collapse has not been predicted by analysts.
The main trade body for the sector, the Bridging and Development Lenders Association (BDLA), moved on Monday to reassure the short-term lending market, following the news on Saturday of MFS’s application to enter administration.
