The financial turmoil surrounding Market Financial Solutions Limited (MFS), a collapsed mortgage lender embroiled in allegations of large-scale fraud, has deepened with administrators revealing that the company’s unsecured creditor debt has increased by approximately £500 million. The debt now totals around £2.33 billion, up from an earlier estimate of £1.8 billion, according to insolvency practitioners from AlixPartners overseeing the case.

MFS was placed into administration in February following a High Court-ordered inquiry into claims of fraud. The lender’s collapse has implicated multiple major financial institutions, including Barclays, Atlas SP (part of Apollo), Elliott Management, Wells Fargo, Castlelake, Jefferies, and Santander. The scandal has also attracted scrutiny over governance practices within the private credit sector.

Among the creditors are roughly 100 private investors who are collectively owed about £200 million. Many of these investors face significant personal financial losses, with some having pensions or life savings invested in MFS.

Administrators have warned that due to the company’s dire financial condition, any meaningful recovery for creditors will depend heavily on the outcome of ongoing litigation. Central to this is a £1.3 billion claim against Paresh Raja, MFS’s former CEO and co-founder, who stands accused of extracting substantial sums through fraudulent means, including “double pledging” — securing debt from multiple parties against the same properties. Raja, 59, is alleged to have misappropriated £1.3 billion and is subject to a worldwide asset freezing order.

The insolvency team has also linked many borrowers to Raja and his associates, suggesting the misappropriated funds may have financed a lavish lifestyle. Raja denies all allegations of fraud or dishonesty and has consistently rejected any wrongdoing.

Barclays, which served as MFS’s banker, froze the lender’s accounts in November following reports of its involvement in a Bangladesh-related corruption probe. Saifuzzaman Chowdhury, the former Bangladeshi land minister, was alleged to have used MFS for UK property transactions; these assets are currently frozen by the UK’s National Crime Agency. Chowdhury denies any misconduct and has claimed that the investigation is politically motivated.

The administrators are currently pursuing Barclays through litigation to release funds from 11 frozen accounts crucial to ongoing insolvency proceedings. They are also seeking any sums that may have been transferred or “swept” from these accounts by the bank. Additionally, other stakeholders have filed proprietary, trust, and similar claims against these funds. Barclays declined to comment on the matter.

This administration is among the most complex in recent UK history, involving more than 200 MFS-related entities and multiple restructuring firms managing various aspects of the case. AlixPartners has indicated that further claims will likely be initiated against other parties suspected of receiving misappropriated MFS assets. Evidence-gathering and identification of potential defendants remain ongoing.

Administrators noted that the evolving debt estimates reflect inconsistencies and inaccuracies in MFS’s books and records. They emphasized that all estimates are provisional pending formal adjudication, which will proceed once uncertainties about the company’s financial standing are resolved.

Paresh Raja’s defence against the £1.3 billion claim was due by a recent deadline, which was extended by one day. Sources close to Raja have indicated an expectation that the defence would be submitted by the close of the extension.