Queensland Nickel was involved in a $250 million deal to buy shares from Clive Palmer's China First company days before administrators were appointed to the business behind the Townsville refinery, a court has heard.
Liquidators on Monday questioned Queensland Nickel's former chief financial officer, Daren Wolfe, in the Federal Court about how the company was managed before it collapsed.
Almost 800 Townsville refinery workers were left without jobs and taxpayers required to fund their entitlements when Queensland Nickel failed earlier this year.
During his examination in Brisbane, Mr Wolfe outlined the scale of Mr Palmer's involvement in the company's interests after he hung up his director's cap.
He also said he believed it was inevitable administrators would be appointed in the short-term.
Mr Palmer has always denied acting as a shadow director at the company after quitting as a director on his election to federal parliament.
But the former finance chief said he reported directly to Mr Palmer and the former MP's nephew, Queensland Nickel director Clive Mensink.
He told of face-to-face meetings where he would hand Mr Palmer and Mr Mensink copies of weekly and monthly financial reports.
He said Mr Palmer, who would use an email address in the name of an alias "Terry Smith", favoured hard copies over electronic versions because he had "concerns about espionage".
The court heard on January 13 this year - five days before administrators were appointed - a share subscription agreement was struck between Queensland Nickel and Mr Palmer's China First company, amongst other entities.
Mr Wolfe said he didn't have any knowledge of the transaction until he was asked to witness documents about it.
"Was there purportedly a debt obligation created against Queensland Nickel as part of that transaction?" Tim Sullivan, QC, for special purpose liquidators PPB Advisory, posed.
"Yes, there was. I thought it was 250 million dollars," Mr Wolfe replied.
It came after the court heard Mr Palmer was involved in approving even low-level expenditure, new contracts, and in decisions not to pay Queensland Nickel's creditors as the company ran out of cash.
Earlier, Mr Wolfe said he formed a view last November the company lacked the cash resources to cover its debts.
But the court was told there were signs of trouble much earlier, in July and August last year, when major creditor - rail services company Aurizon - was not being paid in full.
Mr Wolfe said Mr Palmer and his nephew took the decision to underpay Aurizon, partly because the freight company had been flexible about payments in the past.
He also revealed the Australian Taxation Office, which was owed customs duties, went without.
But Mr Wolfe said there were occasions when Mr Palmer changed his views after discussing matters with Mr Mensink and denied Mr Palmer had absolute control of Queensland Nickel.
However, he said he could not recall any occasion last year when Mr Mensink refused to go along with Mr Palmer's decisions.
PPB Advisory is trying to claw back about $70 million the federal government shelled out to cover the entitlements of axed workers.
The court hearing continues, with Mr Palmer expected to give evidence later this week.