The administrators sorting through the wreckage of Market Financial Solutions Ltd., a UK mortgage lender that collapsed in February, say lenders tied to Atlas SP Partners could be looking at steep losses. In filings with UK Companies House, insolvency firm AlixPartners reported that two MFS units - Amber Bridging Ltd. and Zircon Bridging Ltd. - owe Atlas roughly £970 million. Current projections indicate returns might land between £107 million and £200 million. The numbers are still preliminary, but they represent one of the earliest formal tallies of what creditors are likely to recoup.
"These are public filings from the administrators and our valuation of this position has already accounted for the potential losses referenced in these filings," read an emailed statement from an Atlas representative.
Prior reporting put Atlas's total exposure to MFS at about £400 million, around 1% of its balance sheet. Part of that exposure had support from HSBC Holdings Plc, which in May recorded a $400 million provision and described the hit as a "fraud-related, secondary, securitization exposure with a financial sponsor in the UK." Creditors, including Atlas, had already marked down large parts of the debt. Half a year into the asset search, the latest estimates suggest recoveries will be a fraction of what was advanced.
MFS raised more than £2 billion from multiple creditors, saying the money funded short-term real estate loans. After the firm entered a UK insolvency process, creditors supported a worldwide order freezing assets tied to Chief Executive Officer Paresh Raja and alleged widespread fraud at the company. Amber Bridging was extended nearly £100 million by Avenue Capital Group, and Zircon Bridging received £44 million from TPG Inc. Administrators say they do not expect lenders to recover anything on those loans. Representatives for Avenue, TPG and Raja did not comment.
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