MFS Creditors Warn of £930 Million Shortfall in Collateral (1)

Some creditors of Market Financial Solutions Ltd., the failed UK mortgage firm backed by Wall Street lenders, warned there may be a £930 million ($1.3 billion) shortfall in collateral backing their loans.

Zircon Bridging Ltd. and Amber Bridging Ltd., the companies that forced MFS into a UK form of insolvency this week, accused the London-based firm of using the same assets as collateral for multiple loans. This practice, known as double pledging, may have led to an “unaccounted-for deficiency” of more than 80% on £1.2 billion of debts, according to documents from their claim obtained by Bloomberg.