Morgan Stanley’s £50M Private Credit Bet Preceded £1.8B MFS Collapse
MS•Morgan Stanley purchased £50 million of Class A loan notes in November 2021 from Earthave Bridging to fund MFS’s UK mortgage business, a deal repaid with interest. MFS collapsed in February 2026 under £1.8 billion of debt, raising oversight concerns over banks’ exposure to the $3.1 trillion private credit market.
1. Early Support and Financing
Morgan Stanley was among first global banks to purchase £50 million of Class A loan notes from Earthave Bridging in November 2021, funding MFS’s bridging loans and buy-to-let mortgages.
2. Investment Structure and Repayment
The £50 million note purchase was repaid with interest as Earthave sold the notes to acquire MFS’s mortgage portfolio and later settled investor claims in 2021 and 2024 accounts.
3. MFS Collapse Under Debt
MFS collapsed in February 2026 owing £1.8 billion to creditors; administrators flagged serious governance issues and Paresh Raja’s complex funding network.
4. Broader Exposure and Oversight Concerns
The collapse has highlighted potential losses for major banks and intensified questions about regulatory oversight of the $3.1 trillion private credit market.
