Clive Palmer's multi-million-dollar payments to his father-in-law and a mysterious woman in Kyrgyzstan were among the funds he misused from Queensland Nickel coffers before its collapse, a court has heard.

Key points: A barrister for government-appointed liquidators said Mr Palmer breached his duties to Queensland Nickel by misusing its money

A barrister for government-appointed liquidators said Mr Palmer breached his duties to Queensland Nickel by misusing its money He said Mr Palmer had the company financial controller transfer $8 million to his father-in-law and another $1 million to woman in Kyrgyzstan

He said Mr Palmer had the company financial controller transfer $8 million to his father-in-law and another $1 million to woman in Kyrgyzstan Barrister Graham Gibson, for non-government creditors, said Queensland Nickel was losing $5 million a month

The billionaire was also accused of putting his own interests ahead of workers and creditors by having the failing company buy shares in a "worthless" Galilee Basin coal project.

Mr Palmer was not present at day two of the Supreme Court trial in Brisbane, in which liquidators are suing him, his associates and companies to claw back $200 million owed to creditors.

Those seeking repayment include the Federal Government, which covered $66 million in unpaid entitlements to 800 workers laid off when the Townsville nickel refinery was mothballed in 2016.

Barrister Shane Doyle, for government-appointed liquidators, said the basis of the case included that Mr Palmer was a shadow director of Queensland Nickel and breached his duties to the ultimately doomed company by misusing its money.

He said Mr Palmer had the company financial controller transfer $8 million to his father-in-law Alexander Sokolov and another $1 million to a woman in Kyrgyzstan in 2012 — but no company records justified the claim they "represented" the enterprise.

Mr Palmer later had Mr Sokolov transfer money to Bulgaria for Mr Palmer's nephew and former Queensland Nickel director Clive Mensink, who is now on a "fugitive from Australia warrant" after he failed to attend federal court hearings into the collapse.

Mr Doyle said Mr Palmer's explanation for the $8 million was "natural love and affection" for his father-in-law but the cash was held for Mr Palmer's purposes, not Queensland Nickel's.

He argued that Mr Palmer's claim not to be a shadow director of QN did not stand up given he "often and actively exercised authority over (the company) about a range of matters, both large and trivial".

'Extraordinary is an understatement'

Barrister Graham Gibson, for non-government creditors, said QN was losing $5 million a month and just under $15 million in total before it finally called in administrators because an "increasingly strident" Aurizon was days away from pulling a rail service in a "fatal blow".

He said QN had failed to gain outside finance since September 2015 despite repeated approaches to at least eight Australian and overseas financiers as well as state and federal governments.

Mr Palmer and others had already planned to sack employees before QN went into administration, Mr Gibson said.

Despite its dire straits, and on the same day Aurizon threatened to pull rail services, QN executed "extraordinary transactions" with two Palmer-owned mining companies, China First and Waratah Coal.

"Extraordinary is an understatement," Mr Gibson said.

QN agreed to pay $135 million for shares in China First, which had been a $2 company whose sole director was Mr Palmer's wife Anna.

"It raises the question why a company in such a parlous financial position would pay $135 million — or anything — for the privilege of acquiring shares, even such a handsome number as 2 billion in a company that before this transaction had a paid up capital of $2," Mr Gibson said.

The deal ostensibly secured for QN mining rights to two coal tenements in central Queensland's Galilee Basin.

"The coal project was worthless," Mr Gibson said.

Because QN held no assets under the Queensland Nickel venture, which had the assets held by two Palmer-owned holding companies, there was "no sensible, rational basis for an expectation of (QN's) ability to pay" for the shares, Mr Gibson said.

Mr Gibson said the deal even had an "acceleration clause" — making payments due immediately should QN collapse — showing that its "sole purpose" was to secure Mr Palmer's interests over unpaid employees and unsecured creditors.

Mr Palmer has argued that any control he exercised over the company was as chairman of a committee overseeing a "complex" joint venture involving a number of his companies.

He has argued he legitimately changed the rules to enlarge that control and recorded these in a green notebook in pencil.

Mr Doyle said: "The notebook itself is a curious piece of literature."

"Taken on its face, Mr Palmer could exercise a quorum on his own (and had) full authority to give any direction he wished to (Queensland Nickel)," he said.

The liquidators contend they have evidence Mr Palmer faked some handwritten entries.

Mr Palmer has always denied wrongdoing or liability for QN's unpaid debts.

The trial continues.