Governors of the financially-troubled K College were forced to write off a loan of nearly £300,000 to a company it set up to develop specialist training courses, it has emerged.
The company, LearnInvicta, has gone into administration and ceased trading.
It was taken over by the college in 2010 and was intended to develop courses aimed at re-training armed forces personnel.
K College loaned the company £294,000 over two years to set up and develop a training programme.
However, at the time of the takeover, the government cut funding for a wide range of adult training courses and LearnInvicta was unable to establish itself as a viable company.
Now it has emerged governors decided in October there was no prospect of getting the college's money back and agreed the sum should be written off to allow the company to be wound up.
The disclosure will raise further questions regarding the handling of K College's finances in the week it was announced it would be broken up into separate campuses run by other organisations.
The most recent accounts submitted by LearnInvicta show that in 2010, the company posted losses of more than £83,800 having made a modest profit of £10,219 the previous year.
In a statement, K College said: "As the mother organisation of Learn Invicta, the corporation of South and West Kent Colleges has agreed to take responsibility for its debts and they will be transferred to the college accounts.
"The college had hoped Learn Invicta would be an area for growth but launching it coincided with the downturn in the economy and for that reason it never became a thriving business."
According to the minutes of a governors meeting last October, the college opted to write off the £294,000 rather than keep it running as a dormant company.
Visitors to LearnInvicta's website are now being redirected to the K College website.
K College announced it was to be split up less than three years after a merger dogged by financial crises and uncertainty.
It would see the individual campuses in Ashford, Folkestone, Tonbridge, Dover and Tunbridge Wells operating independently.
A government task force was sent into the crisis-hit college late last year as part of moves to help it sort out its huge debts.
Following that review, skills minister Matthew Hancock said the college would be broken up and that there would be a open competition allowing other organisations to take over the separate campuses.