(Oct 8): The owner of Market Financial Solutions Ltd (MFS) is facing a growing barrage of lawsuits as creditors try to recover about £2.3 billion (US$3 billion or RM12.25 billion) of loans they had extended to the UK property company that collapsed amid allegations of widespread fraud.

Paresh Raja is under pressure to respond to as many as six lawsuits relating to the collapse of Market Financial Solutions, or MFS, his lawyers said in a filing in one of the UK High Court cases. With creditors pursuing overlapping claims and battling among themselves, Raja has urged them to coordinate their efforts and combine at least some of the proceedings. 

Creditors including Barclays plc and Apollo Global Management Inc’s Atlas SP Partners unit backed the sprawling group of entities that made up MFS. Many of those entities are now in administration, a UK form of insolvency, and seeking to recover funds through litigation. Some have accused Raja of looting the company of hundreds of millions of dollars and using proceeds of their loans to fund an extravagant lifestyle.

“These entities have made no effort whatsoever to coordinate these proceedings,” Raja’s lawyers wrote in the filing. “Indeed, there appears to be a significant degree of internecine warfare, the effect of which has been to harass Mr Raja at every stage with increasingly ‘urgent’ applications and across a range of fora, as each entity seeks to get what it evidently perceives to be ‘ahead’ of the others.”

Officials winding down MFS itself have sued Raja for £1.3 billion in a separate case. In his first detailed response to allegations of wrongdoing, Raja last month said he hadn’t “acted dishonestly or in bad faith at any time”. MFS was heading for a sale or an initial public offering before Barclays triggered its collapse by freezing key accounts, he claimed.

One of the MFS entities was London Bridging Ltd, or LBL, which was backed by loans from Barclays and Castlelake LP, an investment firm majority owned by Brookfield Asset Management Ltd. LBL has alleged that Raja “misappropriated” more than £200 million.

Raja has sought to suspend LBL’s case against him pending the resolution of various actions in other litigation, legal filings show. LBL has accused Raja of trying to “delay and/or avoid facing” its claims.

Two other MFS entities, Amber Bridging Ltd and Zircon Bridging Ltd, have indicated that they will issue claims against Raja “shortly”, his lawyers wrote in the filing this week. These entities, which borrowed more than £1 billion, may recover as little as nine to 13 pence on the pound for creditors including Apollo’s Atlas unit, early estimates show.

A spokesperson for AlixPartners, which is managing the administration of MFS, Amber and Zircon, declined to comment.

Administrators for one entity called Market Financial Solutions International Ltd, or MFSI, have “served statutory demands” — a formal request for payment — against Raja for £278 million. A separate entity called Interlend Holdings Ltd wrote to Raja’s lawyers earlier this month “demanding immediate payment” of £28 million. 

“The various claimants are not coordinating their claims,” Raja’s lawyers wrote. “Instead, they are instead advancing competing, and overlapping and/or inconsistent, claims to what appears to be the same pool of money.”

Stephen Katz, an official at insolvency firm BTG Begbies Traynor, who’s overseeing the administration of MFSI and Interlend, didn’t immediately respond to requests for comment.

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