The founder of Market Financial Solutions (MFS), a collapsed shadow banking firm, is engaged in a legal battle to avoid bankruptcy as creditors intensify efforts to recover outstanding debts. Paresh Raja has filed a claim in the High Court seeking to overturn a statutory demand issued by insolvency practitioners representing some of his creditors. A statutory demand is a formal request for repayment, and failure to comply may lead to a bankruptcy petition.

MFS, headquartered in Mayfair, London, specialized in buy-to-let mortgage lending and bridging finance. It operated as a shadow bank, borrowing funds to extend loans. Earlier this year, the company collapsed amid allegations of serious financial misconduct.

Administrators investigating the collapse have claimed that at least £1.3 billion was misappropriated from MFS and remains unaccounted for. They also assert that Mr. Raja and his wife received over £408 million transferred from funds managed by MFS into personal bank accounts located in the UK, Monaco, Singapore, and the United Arab Emirates. These payments have prompted accusations that Mr. Raja used company resources to support a lavish lifestyle, including purchasing multiple luxury cars.

Mr. Raja, however, has strongly denied any wrongdoing, rejecting allegations of fraud and misappropriation. Despite the serious claims, he has declined to provide further comment on the matter. Lawyers representing Mr. Raja, from Mishcon de Reya, are actively seeking to prevent the insolvency experts from pursuing repayment through the statutory demand.

The dispute marks a significant development in the ongoing unraveling of MFS, which had positioned itself as a specialist lender within the shadow banking sector before its sudden failure. The legal proceedings are expected to clarify Mr. Raja’s personal liability in connection with the company’s financial collapse.