The insolvency proceedings related to Market Financial Solutions (MFS), a mortgage lender at the center of a sprawling fraud investigation, are expected to cost more than £50 million for just one part of the collapsed group, administrators have estimated. Alix Partners, appointed as administrator, launched the assessment following MFS’s entry into administration in February amid allegations that as much as £1.3 billion of its £2.3 billion loan portfolio is missing.

The collapse, viewed as one of the most complex and costly corporate failures in recent UK history, involves numerous insolvency and restructuring firms working across hundreds of connected entities. Alongside Alix Partners, firms such as Teneo, Grant Thornton, FRP Advisory, FTI Consulting, and Begbies Traynor are engaged in the extensive investigations, signaling that the total cost of examining the failure will run substantially higher.

MFS, which provided mortgage and bridging finance, came under scrutiny after a High Court judge mandated investigation into suspected fraud. The lender is alleged to have engaged in “double pledging,” a process where security interests were purportedly granted over the same properties to multiple lenders, potentially rendering significant portions of the loan book unsecured and unrecoverable. MFS’s founder and CEO, Paresh Raja, currently based in Dubai, is subject to a global freezing order and travel ban on assets valued at £1.3 billion.

The lender’s financial overseer, the City regulator, has also opened an investigation into the firm’s supervision under anti-money laundering and counter-terrorism financing frameworks. Creditors include major institutions such as Barclays, Elliott Management, Wells Fargo, Castlelake, and Santander, while retail borrowers have also been affected by the fallout.

Alix Partners has identified a key spreadsheet detailing loans categorized by separate silos within the group. Preliminary findings indicate that certain properties appear in multiple silos, inflating the total value of collateral and casting doubt on the security backing the loans. These revelations have deepened concerns about widespread financial mismanagement within the group.

Additional legal developments include a High Court ruling implicating Raja in the creation of deceptive documentation to justify payments deemed illegitimate. MFS has also been linked to a corruption scandal in Bangladesh.

The collapse has intensified apprehension surrounding risks in the private credit or “shadow banking” sector, especially following heightened regulatory scrutiny triggered by notable private credit failures in the United States last year. Insolvency sources predict prolonged legal disputes given the intricate web of lenders and competing claims on security.

Raja has declined to comment on the investigations or the allegations associated with MFS.