A £1.3bn worldwide asset freezing order has been granted against the tycoon accused of fraud after his UK mortgage lending business collapsed.

Paresh Raja, the founder and chief executive of Market Financial Solutions (MFS), is now barred from dissipating assets worth up to the suspected value of funds allegedly missing from his mortgage and buy-to-let lending company, after orders from courts in London and Dubai.

The orders, which follow an application from insolvency practitioners at AlixPartners, also impose a travel ban on Raja, who is now thought to be in the Emirates.

A spokesperson for AlixPartners said: “We welcome the granting of these applications which follow two weeks of intense analysis and investigation into the operations and affairs of MFS and Paresh Raja. This is an important and significant step in this very complex situation, and the support of the courts is critical as we continue our pursuit of the best possible outcome for all creditors of both MFS and its associated companies.”

Raja did not comment.

What is the MFS scandal?

MFS collapsed in February. The group supplied bridging – or short-term – loans and was owned by entrepreneur Raja and his wife. It filed for administration last month amid allegations of fraud, leaving a string of financial firms owed in excess of an estimated £1.3bn.

So what happened?

Companies owned by Raja borrowed from a series of financial institutions – including banks and hedge funds – before loaning that cash to MFS, which extended mortgages to customers. Two of the intermediary companies owned by Raja – Zircon Bridging Ltd and Amber Bridging Ltd – were placed into administration, triggering MFS’s own insolvency. Administrators for Zircon and Amber then filed an urgent court application arguing the directors and owners of some companies that ultimately received mortgages from MFS were actually individuals connected to Raja.

The borrowers under suspicion – all of which appear to share the same registered address and the same accountancy firm as MFS – “may have been a device designed to extract monies” from Zircon and Amber “on false pretences”, the creditors have argued in court documents.

It is also feared that some loans may prove to be unsecured and therefore irrecoverable, with allegations that security has been granted to two or more financial institutions at the same time over the same property, in a process known as “double pledging”.

What does Raja say about all this?

He has not commented much, but his lawyer told the Daily Telegraph: “Mistakes have been made but there has been no intention to defraud whatsoever and Mr Raja has not been the beneficiary of any shortfall (if any) there may be.

“These allegations are based on fundamental misunderstandings and assumptions and are materially incorrect.”

Who looks to have lost out?

The financial institutions that appear to be on the hook include banks such as Barclays, Jefferies and Santander, as well as hedge funds and “private credit” lenders including Elliott Management, Castlelake and Apollo’s Atlas SP unit.

MFS’s collapse is the latest credit shock to hit banks and private credit. Similar accusations of double pledging surfaced last year in the failures of US auto parts supplier First Brands Group and sub-prime auto lender Tricolor Holdings.

Remind me, what is private credit?

As the name suggests, these are loans arranged privately and often sit outside the regulatory framework governing banks. The sector largely grew out of the financial crisis of 2008, when regulators moved to reverse a lot of the reckless lending of the previous decades by increasing the constraints on mainstream banks. However, there have been questions about the rigour with which the sector assesses who it is loaning to. In October, Jamie Dimon, the boss of JP Morgan, warned over further losses linked to the sector, saying: “I probably shouldn’t say this but when you see one cockroach, there’s probably more.”