John Pesutto closing in on rescue package to avoid bankruptcy

John Pesutto is close to securing a deal to bail him out of the $2.3m legal debt threatening his political career, with an entity closely tied to the party coming forward with a rescue package.

Embattled former Victorian Opposition Leader John Pesutto is close to securing a deal to bail him out of the $2.3m legal debt threatening his political career, sources say.

Multiple senior Liberal Party sources have told the Herald Sun Mr Pesutto has become increasingly confident of a deal being done with an entity closely tied to the party that would see him loaned up to $1.5m which would allow him to honour the debt.

Colleague Moira Deeming this week initiated formal bankruptcy proceedings against Mr Pesutto for his failure to pay the debt, imposed by the Federal Court which ruled he was liable to pay $2.3m in legal costs amassed by Mrs Deeming in her long-running defamation battle against the former leader.

It prompted a public fundraising campaign by supporters of Mr Pesutto which raised over $200,000 by 606 donors.

On Wednesday night organisers of the campaign said they would no longer be accepting donations.

“We are hopeful now of a favourable outcome for John,” organiser Elizabeth Sceney said.

“We are pausing further donations to this campaign and will update you when we know more. Thank you for your support.”

John Pesutto is getting closer to a career-saving rescue package. Picture: David Crosling

The looming debt bomb has plagued the party for months because of the prospect Mr Pesutto would be ineligible to sit in parliament if he can’t pay the massive legal bill and is bankrupted.

It would trigger a potentially damaging by-election in Mr Pesutto’s Hawthorn electorate which senior party officials fear would be lost to a strong independent candidate.

Such an outcome would inevitably ignite serious leadership tensions and a potential move to oust current leader Brad Battin and kill any momentum the party hoped to build ahead of next year’s general election.

The Coalition needs to win 16 seats, and lose none, if it hopes to form government and end 12 years of Labor government in the state.

If it fails to do that, the party will have to wait until 2030 for its next shot at government — 20 years since last winning an election.

By that time it would have spent just four years in office in 31 years.

Former premier Jeff Kennett sensationally intervened in Mr Pesutto’s debt problem this week, urging the Liberal Party’s administrative committee to find a solution.

Moira Deeming this week initiated formal bankruptcy proceedings. Picture: David Crosling

In his letter to the committee Mr Kennett outlined 10 reasons they should pay, including the more than two year impact the case has had on the party.

“This matter can be resolved quickly by the Party and its agencies if we pay the outstanding claims on JP,” he wrote.

“Regardless of what you think of John personally, what he said, the judgement, the consequences are much greater than an individual.”

In December the Federal Court found Mr Pesutto had defamed Mrs Deeming in a series of publications by asserting she had links to neo-Nazis after she attended a now infamous Let Women Speak Rally.

The Herald Sun understands the Liberal Party’s administrative committee is squarely split over the issue of whether or not to help Mr Pesutto amid concerns it would set a precedent for similar future incidents.

There is also concern among some about an angry backlash by branch members ahead of looming committee elections.

One senior Liberal MP told the Herald Sun: “the party will just have to work around admin. A solution appears close.”

The ongoing public battle between Mr Pesutto and Mrs Deeming has plagued the party for more than two years since it began in March 2023.

Originally published as John Pesutto closing in on rescue package to avoid bankruptcy