The owner of Market Financial Solutions (MFS) has been allowed to move £3mn out of a frozen bank account to pay law firm Mishcon de Reya as he defends a claim that he misappropriated at least £1.3bn before the UK lender’s collapse.

Administrators of MFS told London’s High Court that they had agreed to Paresh Raja transferring the funds to Mishcon to cover his legal fees, according to a court order handed down this month. Alix Partners had alleged in May that Raja was the architect of a fraud that has left MFS’s creditors, including some of the world’s largest banks and hedge funds, at risk of a £1.3bn shortfall. Raja has denied the allegations and his spokesperson said he "has consistently maintained there was no fraud or dishonesty".

Mishcon is one of London’s go‑to law firms for high‑profile business figures. Its work on cases such as Lord Peter Mandelson and former BP chair Albert Manifold highlights the scale of legal costs being incurred as part of the fallout from MFS’s collapse.

Creditors to MFS are facing an alleged shortfall following the group’s collapse. Companies including Barclays, Jefferies and Apollo’s Atlas SP Partners extended more than £2bn of financing to the Mayfair‑based firm, which claimed it could offer customers loans "as large as £50mn in as little as three days".

inatsis