GEORGE Reynolds revealed in court yesterday that his chipboard business handed over £900,000 to Darlington Football Club - days after writing off a previous £6m on the grounds that the club would never be in a position to pay it back.

The former Quakers chairman was giving evidence on the second day of a public examination at Teesside County Court into the collapse of George Reynolds UK (GRUK).

He was asked repeatedly by barrister Anthony de Garr Robinson, representing GRUK's liquidators Deloitte and Touche, why the money was paid out to the football club.

Mr Reynolds said: "The reason I probably did it was because I put money in. Another reason is my main object was to get that stadium complete."

Mr de Garr Robinson asked: "There was a chance that Darlington might not be able to repay it?"

Mr Reynolds replied: "I couldn't see that it would not."

Mr Reynolds told the court how work on the car park at the Reynolds Arena was only completed after he "did a swap" with the contractors, Hall Construction.

He claimed Hall's directors agreed to carry out the work in exchange for his engineering yard at Coundon, County Durham, because he had run out of money.

The Coundon site had initially been acquired by him, he said, by doing a swap for a house he owned.

During four hours in the witness box, Mr Reynolds was questioned about the sale of GRUK's plant and machinery to Vertex in February 2002.

He told the hearing he dropped the price of parts of the chipboard business to achieve a quick sale. "I was sick to the teeth with it by then. Realistically, I dropped the price and that's it."

Accounts showed that parts of GRUK were sold for more than £2m when they had earlier been valued at nearer £6m.

GRUK eventually went into voluntary liquidation, leaving debts of £4.7m. The public examination, called to help Deloitte and Touche recover money for creditors, was adjourned by Judge John Bailey and will sit again at a date to be set.

In the meantime, Mr Reynolds must produce paperwork he claims to have on payments to creditors, after which he will be asked to sign a transcript of the proceedings.

He said after the hearing he was delighted to have been able to explain his business dealings in open court.

"They are just digging into it and I think it's right they are digging into it. It's proven we are whiter than white," he said.