The founder of Market Financial Solutions (MFS), Paresh Raja, has denied allegations that he misappropriated at least £1.3 billion from the mortgage lender, instead attributing the company's collapse to actions taken by Barclays. The Mayfair-based mortgage provider, which specialized in high-interest bridging loans secured against property, ceased operations in February owing more than £2 billion to global banks and private credit firms.

In a defence submitted to London’s High Court on Friday, Raja argued that Barclays triggered MFS’s downfall by freezing the company’s group accounts, totaling £145 million, in November 2025. He claimed the freeze effectively immobilized the business, preventing it from making critical payments to staff, suppliers, borrowers, and lenders. Barclays served not only as MFS’s primary banker but also provided funding through loans to various vehicles controlled by the group.

The lawsuit, brought by administrators managing MFS’s insolvency, accuses Raja of diverting at least £1.3 billion to finance a lavish lifestyle, including the acquisition of numerous luxury cars. Raja maintains the funds he received were legitimate, representing agreed remuneration and dividends due to him as the company’s owner. He also contends that a significant property portfolio valued at over £1.1 billion, initially estimated by administrators at £950 million, was held for MFS’s benefit, and that this valuation should be taken into account when assessing the alleged shortfall to creditors.

Barclays has denied wrongdoing, stating it acted in full compliance with legal and regulatory requirements. The bank described the events leading to MFS’s failure as a “fraud caused by MFS and Mr Raja,” emphasizing that it is not a party to the ongoing litigation.

Raja was subject to a travel ban imposed by administrators in March 2026, which initially confined him to Dubai. The ban has since been lifted, allowing him to spend significant time in Monaco. Under a freezing order still in effect, Raja is restricted from spending more than £5,000 per week without consent and must disclose assets valued over £10,000.

Creditors including Barclays, Jefferies, and Apollo’s structured credit arm Atlas SP Partners are now engaged in efforts to assess the value of their collateral amid court allegations that MFS engaged in double-pledging assets to multiple lenders. These firms were part of a consortium that extended over £2 billion in loans to MFS, which previously claimed it could issue loans as large as £50 million in as little as three days.

A spokesperson for Raja asserted that following Barclays’ account freeze, Raja reinvested in MFS and cooperated with administrators for a week to support efforts to salvage the business and protect nearly 200 jobs. The dispute highlights the complex interplay of banking relationships, corporate governance, and alleged financial misconduct at the heart of MFS’s collapse.