Inside the £1.3bn MFS black hole: How a bridging giant unravelled

The collapse of bridging lender Market Financial Solutions (MFS) has shocked the sector but administrators still have plenty of work to do before the full extent of the Mayfair lender’s downfall can be uncovered.

When MFS entered administration in February it was no ordinary company failure, with allegations of fraud and a complex web of interconnected companies going through different administrations.

What went wrong at MFS?

MFS shook the industry when it folded and applied to enter administration earlier this year, which the lender blamed on an “unexpected banking-related issue" at the time.

However, court filings, seen by Bridging & Commercial, revealed that its accounts had been frozen by Barclays in November 2025.

This led to the floating charge holders behind a series of entities in the MFS group going into administration. Each has its own different administrator.

Administrators and creditors behind two of these, Amber Bridging Limited (ABL) and Zircon Bridging Limited (ZBL), issued a successful application for their own practitioner — AlixPartners — to take charge of the administration in February 2026.

The claim was issued after an estimated shortfall to creditors was found to be in excess of £1.3bn.

Court documents suggest there may have been “double pledging” where the same properties were used repeatedly as security for multiple loans while ABL and ZBL also found that loans were given to properties owned by parties connected to Raja.

It paints a starkly different picture to the rapid rise of MFS, founded by Raja in 2006, which saw its loan book soar to £2.4bn by the end of 2024.

But its rapid growth did raise suspicion among other lenders in the sector.

“We were always puzzled how MFS was growing so rapidly, when other parties like ourselves found the market to be much smaller, particularly when avoiding the subprime segment,” said Johan Groothaert, co-founder and chief executive of bridging lender Fiduciam.

Additionally, Companies House charges show that other MFS entities such as Twinwin Ltd, also in administration under FRP Advisory, appear to have a loan book funded by other companies in the group including ABL and ZBL. This all adds to the complexity of the business.

The next phase of the MFS investigation

The £1.3bn question is: what comes next?

The Financial Conduct Authority (FCA) has confirmed that it is investigating MFS as part of its Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

A company owned by Paresh Raja previously invested in the ultimate parent company of Interbridge Mortgages Limited. Interbridge Mortgages recently secured a senior warehouse facility of up to £300m from Citigroup.

Jonny Jones, chief executive at Interbridge Mortgages said Raja’s investment has no commercial, operational, financial or governance connection to any company associated with MFS.

He added that Raja has no operational or board role or influence with Interbridge Mortgages including over the Citi facility.

Jonny said: “Interbridge Mortgages is not impacted by, or exposed to, the collapse of MFS. All companies in the group continue to operate as normal, in line with their funding arrangements and obligations to customers and partners.”

Citigroup did not respond to requests for comment.

Meanwhile, under a typical administration, a director would need to provide a statement of affairs within 14 days but that has not appeared on Companies House.

Raja is believed to be in Dubai, where a spokesperson said he has been a resident for the past five years and it is reported there is an asset freezing order imposed on him.

But it is understood that administrators will be presenting their own proposals which will outline the extent of the shortfalls and the creditors.

This process can typically take eight weeks.

MFS administrator AlixPartners declined to comment. A spokesperson for Raja declined to comment further on the court allegations.

Several prominent lenders and investment banks are known to have high levels of exposure to MFS after backing the company in recent years.

Barclays is among these banks. Speaking at the Morgan Stanley European Financial Conference in March, its group chief executive C.S. Venkatakrishnan said he was disappointed that the bank had anything to do with MFS and also Tricolor — a collapsed sub-prime auto lender that had inflated its valuations — and described the companies as a “fairly deep and sophisticated fraud.”

He said Barclays’ exposure to MFS is “materially lower” than the £500m that has been reported and is a number that is “not the kind that would have been material enough for us to report on an inter-quarter basis.”

Santander is also reported to have commercial mortgage exposure of £200m to £300m but there was no mention of concerns in its quarterly results.

A spokesperson declined to comment.

Alternative investment firm Castlelake has confirmed that it has £70m of exposure to a secured mortgage portfolio that had been serviced by MFS.

But a spokesperson was unable to comment further.

Meanwhile, investment bank Jefferies has been open about its exposure to the collapsed lender, revealing in a letter to investors that one of its European subsidiaries had loaned £103m to MFS.

Jefferies said it believed the net impact on its net earnings over time is likely to be less than $20m.

What comes next for funders, lenders and borrowers

Beyond financial losses, there may also be lessons to be learned for the bridging sector.

Barclays is already reportedly scaling back its asset-backed lending. The lender did not respond to requests for comment.

Alan Andrews, commercial finance and marketing consultant at KIS Finance said the most immediate impact is likely to be at the funding level.

“Should funders pull back, this would reduce liquidity across the bridging market, forcing lenders to seek alternative sources of capital,” Alan said.

“In turn, this is likely to increase borrowing costs and reduce product availability.

“Even where funders remain active, enhanced due diligence and stricter oversight are expected, which could slow deal times in a sector where speed is a key advantage.”

The knock-on effect for borrowers will likely be higher costs, reduced choice and longer turnaround times as well as reduced confidence in private credit, he warned.

Johan said there are lessons to be learned, particularly when it comes to how firms are funded.

Analysis by Fidicuiam showed MFS Group had a low ratio of equity to balance sheet of just 2.5%.

“We need to create a much healthier industry,” he said.

“Everybody should be doing full audited, consolidated accounts.

“Lenders should also have a minimum amount of equity rather than excessively relying on leverage and they need to provide much more transparency on loans to funders and investors than is currently the case.

“Ultimately, we need an end to the gold rush mentality. Bridging and direct lending in general is not easy money.”