Lawyers and consultants feast on shadow bank’s £1.3bn implosion

Tom SaundersSun, October 18, 2026 at 11:00 AM UTC

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Stone Buildings, a row of Grade I-listed chambers tucked just off Chancery Lane in Lincoln’s Inn, is home to some of the most sought-after barristers in the country.

Stone Buildings, a row of Grade I-listed chambers tucked just off Chancery Lane in Lincoln’s Inn, is home to some of the most sought-after barristers in the country.

One of the commercial chanceries housed at 4 Stone Buildings has 10 KCs on the books.

Three of them, and one junior, are rummaging through the wreckage of Market Financial Solutions (MFS), the shadow bank that collapsed this year amid allegations of a £1.3bn fraud.

One is working on behalf of some of the creditors to MFS, while the rest are defending MFS’s founder, Paresh Raja, who has been accused of receiving more than £400m from funds managed by MFS into “personal bank accounts” in the UK, Monaco, Singapore and the United Arab Emirates.

Raja strongly denies the allegations and has consistently maintained that there was no fraud or dishonesty.

His defence team includes some of the most prominent barristers in the country, including Richard Hill KC, who was part of the defence of the late Mike Lynch in what was billed as the UK’s biggest ever civil fraud trial and continues to act for his estate.

While the MFS collapse initially sent shockwaves through the financial sector, its implosion is now rippling into the legal and consultancy sector.

A battle between MFS’s former boss and creditors has unleashed at least 20 active court cases, as competing groups race to be the first to lay a claim to what is left of the company.

For some of the firms involved in the collapse, the sums on offer could be life-changing. With the carnage expected to take years to clear up, Britain’s legal sector is likely to feast for some time to come.

Against Raja are MFS’s creditors, which include groups such as Barclays, Santander, Apollo-backed Atlas and Castlelake.

And at the centre of it all are at least 10 different firms of administrators, who have the unenviable task of trying to recoup as much money as possible.

For some of the firms involved in the collapse, the fees are already starting to roll in.

Begbies Traynor and its co-administrator, Coots & Boots, initially suggested total fees of around £74m for the pair – nearly half what Begbies makes in a year.

AlixPartners, which is managing the main MFS entity and a number of others, has run up around £16.1m in the first six months of its work on the case, though the vast majority has not been paid yet.

The global consulting firm is suing Raja personally for £1.3bn and has retained American powerhouse lawyers Kirkland & Ellis for its claim, as well as Andrew Green KC.

Paresh Raja, Market Financial Solutions’ founder, has denied any allegations of fraud or dishonesty

Described as a “beast” in court, Mr Green is possibly best known for defending the Mirror against phone-hacking claims led by Prince Harry – the first barrister to cross-examine a member of the Royal family since 1891.

Kirkland & Ellis and others have already racked up £12.4m in legal fees for the main MFS company, while Raja has been allowed to move £3m out of a frozen bank account to pay another set of lawyers, this time Mishcon de Reya.

The main claim against Raja is one of five, according to his lawyers, with a sixth potentially on the way.

They have hit out at alleged “internecine warfare”, as rival creditors jostle to carve up what is left of the collapsed lender.

MFS described itself as a specialist provider of buy-to-let mortgage lending and bridging finance, giving it exposure both to complex financing arrangements and a spate of properties.

The money left to fight about is broadly held in three places: company bank accounts, Raja himself and properties.

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In total, there is £173m sitting in more than 200 MFS bank accounts, an unknown amount of cash held by Raja and the biggest prize of all, a collection of prime London real estate, which could be worth around £900m.

The majority of the MFS bank accounts are operated by Barclays, which is owed about £500m by MFS. So far, Barclays has refused to hand the funds remaining in the accounts to the administrators, saying it is for the courts to decide whose money it really is.

Grant Thornton, working on behalf of an MFS company that Santander lent to, recently received £21m after it successfully applied to the High Court to recover the funds.

Begbies and AlixPartners have also brought their own claims against Barclays, some of which the bank is defending.

At the same time, the administrators are all trying to go after Raja himself.

After combing through more than 8,000 individual receipts and payments from one MFS company, allegedly used by the founder to extract money for his own personal benefit, Begbies discovered roughly 400 payments that appeared to be related to either Mr Raja or his family.

Antique pens, artworks, high-value watches, luxury motor vehicles, sporting memorabilia and debentures at sporting venues were all paid through company accounts, the administrator said.

So far, it has recovered £200,000 from one luxury-goods seller, but the real prize is substantially greater. Begbies reckons more than £400m could be at stake for creditors.

Begbies has tried to push Raja into bankruptcy, claiming the money is owed to them through director loans.

One company that Barclays and Castlelake lent to has claimed the money as compensation for breach of a trust agreement. Companies that Atlas and TPG Angelo Gordon, another private credit player, both lent to have said they will bring their own claims for the money.

The tussle for control of Raja’s estate has prompted reprimands from Mr Justice Tower, one of the many judges involved in the case.

“One would have expected” there would be cooperation to move forward, the judge said.

“I don’t really get that impression at the moment and I am rather surprised,” he added.

The big prize for creditors and administrators is the collection of mansions in Mayfair, Belgravia and other choice areas of central London.

There are so many that administrators are genuinely concerned that they could flood the market if all were sold at once, depressing prices across the capital.

Each creditor has overlapping claims for the properties – a key part of the “double pledging” fraud accusations that first arose when MFS collapsed. A core question is who actually owned them, and for what purpose.

Different companies want the properties treated as different things.

The company that Barclays and Castlelake lent to wants them to be owned by Raja, so it makes it more probable they can recoup their cash. AlixPartners wants them to be treated as part of MFS, given they were bought with money taken from the business.

According to photographs seen by The Telegraph, MFS’s offices had once been covered in sports memorabilia and albums signed by the likes of Pink Floyd.

When administrators first arrived at MFS’s offices, the walls were bare. So far, less than £1m has been recovered from the ashes of MFS’s main entity, the sum of some loan book collections, computer equipment, motor vehicles and furniture.

Back in Lincoln’s Inn, the barristers on both sides can at least be sure of one thing: the bills will keep coming.

All parties declined to comment.

Original Article on Source

Source: “AOL Money”