The boss of a collapsed shadow bank has blamed Barclays for the lender's failure as he fights a £1.3bn fraud claim.
Lawyers for Paresh Raja , who ran Market Financial Solutions (MFS), said Barclays' decision to freeze MFS's accounts in Nov 2025 was the "ultimate cause" of its collapse.
Mr Raja is fighting claims from creditors who say he received more than £408m from funds managed by MFS into personal bank accounts in the UK, Monaco, Singapore and the United Arab Emirates.
He strongly denies the allegations and has consistently maintained that there was no fraud or dishonesty.
MFS was a shadow bank, meaning it funded its loans by borrowing from banks and other lenders.
Founded in 2006, it described itself as a specialist provider of buy-to-let mortgage lending and bridging finance. It fell into administration in February, triggering allegations that at least £1.3bn had been "misappropriated" from the business.
The fraud allegations were made in a lawsuit brought by some of the shadow bank's creditors including Barclays, Santander, Wells Fargo and Jefferies.
The lawsuit included claims that Mr Raja instructed employees to destroy documents in the weeks leading up to its collapse.
In his defence, Mr Raja claimed that Barclays' decision to freeze payments paralysed the business, ultimately leading to its demise, and that it had never been balance-sheet insolvent nor – to Mr Raja's knowledge – defaulted on a loan payment.
Lawyers for Mr Raja said Barclays had held roughly £145m in accounts.
They denied that he ordered any deletion of company documents, instead claiming that he had asked one of his employees to "tidy up" the business's Dropbox folders to assist the incoming administrators.
Barclays said: "Barclays has acted at all times, and continues to act, in accordance with its legal and regulatory obligations. As MFS's administrators have alleged, this was a fraud caused by MFS and Mr Raja."
Mr Raja's lawyers claimed that the £1.3bn figure was the result of flawed arithmetic, rather than based on tracing money to Mr Raja. They added that the administrators' case failed to take into account at least £950m in value in the MFS Group.
The value referred to a portfolio of properties that administrators argued were acquired on behalf of Mr Raja. In his defence, he said that these were instead "held on trust for the MFS Group".
FRP Advisory and Begbies Traynor have been drafted in to sell more than 250 property companies controlled by individuals with links to MFS, with the hope of raising funds to repay some of the company's creditors.
Many of these companies are ownership vehicles for luxury flats across London's most exclusive neighbourhoods, including Mayfair, Belgravia, Kensington, Knightsbridge, Fitzrovia, Marylebone and Nine Elms.
They range from stuccoed residences in upmarket addresses such as Berkeley Street, Grosvenor Square and Portland Place to upscale flats in modern developments.
The defence also claims that since 2022, Mr Raja had been working towards a sale or flotation and had engaged both KPMG and BDO on the matter.
A spokesman for Mr Raja said: "Paresh Raja spent 20 years building this business . The actions of Barclays destroyed it within weeks.
"Mr Raja will defend this claim all the way. He remains ready, as he always has been, to work with any officeholder whose priority is recovering value for creditors rather than running up costs in their own interests."
BDO and KPMG were contacted for comment.
