Co-Founder and former MFS CEO Michael King outside Darlinghurst Court. Source: The Australian

"I'm very, very sorry they lost money," King said before entering the NSW Supreme Court in Sydney yesterday for the first day of a public examination by the liquidator of his failed company, formerly known as MFS.

Asked inside the courtroom to described his occupation, he said simply: "Insolvent, under administration, adviser."

Burdened with debts of more than $120 million, King said he had been forced to sell more than half of his 130ha Elysian Fields polo grounds in the Gold Coast hinterland. All the proceeds had been paid to his creditors, he said.

But King rejected allegations by the liquidator's counsel, Adam Bell, SC, that documents were frequently backdated at MFS.

He also denied that MFS had taken steps to hide its financial stake in the capital raising for a related entity.

Mr Bell, on behalf of the liquidator, presented evidence to the court that backdating of documents had occurred in relation to the deconsolidation of MFS's operations in New Zealand in 2006.

MFS made a decision to sell off 60 per cent of its investment in MFS Pacific Finance in 2006 to "friends and family'', Mr Bell told the court.

Documents showed a shareholder agreement to that effect was struck on June 29, 2006.

But an email from chief financial officer David Anderson nearly a month later, on July 24, indicated the agreement remained unsigned.

Mr King said there was no systematic backdating of documents, although when confronted by Mr Bell he acknowledged that it had clearly happened on this occasion.

He said he was in England at the time and he belittled Mr Anderson for speaking in "complicated verbose riddles''.

Mr King was also questioned about related entity Management Finance, which held beneficial interests of the company, and the backdating of documents to July 1, 2006. He said he had no recollection of that occurring at his instruction.

Mr Bell raised questions about the 2006 MFS annual report, which detailed the $110 million sale of Australian Alpine Enterprise to MFS Living and Leisure.

A March 2006 email Mr King sent to other directors indicated the deal would go through subject to a successful capital raising by MFS Living and Leisure. Yet the annual report said it had gone through unconditionally in the 2006 year.

But the sale required a sub-underwriter and the additional help of $30 million from "friends and family', including a stake taken out by the Premium Income Fund, which was then managed by MFS.

Mr King said there were commercial pressures to get the deal done. "Of course we had to get it away,'' he told the court.

Mr Bell said that MFS would control about 20 per cent of the sale but this fact would have been obscured. Asked if MFS was trying to hide the fact that more had been contributed from the Premium Income Fund, Mr King said "possibly''.

At one point, Mr King acknowledged that he had grown "frankly confused'' with the convoluted chronology of deals and movements of money.

Mr King conceded that MFS had paid too much when it shelled out $41 million for the Sun Kids childcare group and $91 million for the Sun Leisure business of letting rights for holiday units.

MFS co-founder Phil Adams had negotiated both deals with Soheil Abedian, the founder of Gold Coast development group Sunland, and had been outwitted, Mr King said.

King's grilling is set to continue today and tomorrow in a public examination run by liquidator Kate Barnet from Bentleys Corporate Recovery.

The examination, expected to conclude in October, is trying to determine when the company became insolvent, with the focus on about $1 billion in inter-company transactions.