March 10 (Reuters) - Creditors of UK's Market Financial Solutions are facing a shortfall of 1.3 billion pounds ($1.75 billion), and have discovered a network of companies that were closely linked to
MFS creditors face $1.8 billion shortfall, UK court filings show
Overview of Market Financial Solutions Collapse
LONDON, March 10 (Reuters) - Creditors of Market Financial Solutions face an estimated shortfall in excess of 1.3 billion pounds ($1.75 billion), partly because the imploded UK mortgage provider lent to connected borrowers and double-pledged collateral, creditors said in court filings seen by Reuters on Tuesday.
Impact on Financial Markets
Last month's collapse of London-based MFS, which specialised in complex property-backed loans, sent shockwaves across European and U.S. banks and private credit funds, fuelling concerns about lax lending standards and cracks in booming credit markets.
Major Lenders Exposed
Barclays, Santander, Jefferies, Elliott Management and Apollo-affiliated Atlas SP Partners are among the lenders with exposure to MFS, sources have previously said.
Asset-Based Finance and Double-Pledging Concerns
MFS's troubles raise particular questions about the market for asset-based finance, which involves loans that are backed by collateral such as hard assets.
Double-Pledging in Focus
They also swing the spotlight on double-pledging - a practice that lay at the heart of the twin bankruptcies of U.S. auto parts supplier First Brands and car dealership Tricolor.
Creditor Actions and Court Proceedings
Administration and Shortfall Estimates
Zircon Bridging (ZBL) and Amber Bridging (ABL), two MFS creditors now in administration, said MFS's collapse had accelerated in the last two weeks. Administrators working on behalf of creditors last month put the collateral shortfall at around 930 million pounds, London High Court filings showed.
Legal Filings and Allegations
Creditors of MFS successfully applied to place the company into administration, citing financial irregularities and mismanagement in court documents dated March 9.
ZBL and ABL attributed the creditor shortfall to "improper and likely fraudulent conduct".
Company Response and Additional Information
MFS, founded by CEO Paresh Raja, did not respond to a request for comment. The company is unaffiliated with the U.S.-based asset manager MFS Investment Management.
($1 = 0.7427 pounds)
(Reporting by Kirstin Ridley and Sam Tobin in London and Prerna Bedi in Bengaluru; Editing by Tommy Reggiori Wilkes and Andrei Khalip)
