Debts at the defunct K College were cleared after the Skills Funding Agency (SFA) dished out a £30.4m grant, FE Week can reveal.
The SFA confirmed it paid the debt-ridden college before it was split into five campuses and taken over by East Kent College and Hadlow College from last month.
The SFA said the grant was then used to pay back the advances it had paid to the college, but it insisted the debt had not been “written-off”.
It would not reveal how much was owed in the form of advances. However, East Kent College principal Graham Razey (pictured) has said K College owed £16m to the SFA and £18.5m to Barclays.
But the grant meant K College transferred to East Kent and Hadlow with a fraction of the debt.
And FE Week can also reveal that both takeover colleges have struck deals with the SFA to guarantee funding allocations, in Hadlow’s case for three years and East Kent for two. However, neither college disclosed the value or conditions of the guarantee.
An SFA spokesperson said: “All advances of funds are paid out on the understanding that they will be recovered against future funding and they are always recovered by us.
“K College was allocated a grant of £30.4m to cover the costs of maintaining provision which was used to recover the outstanding balance of funds paid out in advance at that time. No amount has been written off.
“The decision to issue a grant was taken to protect the needs of existing learners and put in place better local provision for the future.
“The decision was made following extensive consideration of all alternative routes, the anticipated costs of those alternatives and consideration of the impact on existing and future learners.”
From last month, East Kent took K College campuses in Folkestone and Dover, while Hadlow had Tonbridge, Tunbridge Wells and Ashford sites.
The break-up and sale was agreed after K College debts spiralled out of control. The college was also branded inadequate by Ofsted in December last year.
Mr Razey told FE Week: “As far as I’m concerned, there was no SFA debt. I can’t speak for Hadlow, but I would be very surprised if they still had any.
“What I know from my point of view is that in there was an outstanding liability of £500,000 to Barclays relating to the Folkstone campus which was settled at the point of the takeover. There was no debt relating to Dover.”
Hadlow declined to comment.