Controversial former Auburn deputy mayor Salim Mehajer has been declared bankrupt by a Federal Circuit Court judge, ratcheting up the pressure on the property developer as he faces a string of criminal charges.
The liquidator appointed to Mehajer's failed company, SM Project Developments, served a bankruptcy notice on Mehajer in September last year and kicked off bankruptcy proceedings in November over a $200,000 debt.
A range of other creditors are chasing Mehajer for payments and the total bill exceeds $1 million.
The liquidator's petition to bankrupt Mehajer was supported by the Australian Taxation Office and Greenacre-based company Prime Marble & Granite, which helped construct what NSW District Court Judge Judith Gibson has previously described as Mehajer's "marble palace" in Lidcombe.
In a judgment delivered in October last year, Judge Gibson found Mehajer had failed to pay a $596,178 bill for elaborate stonework at the luxury residence.
Judge Gibson ordered Mehajer to pay $668,276, which covered the invoice and interest. He was also ordered to pay legal costs, estimated at $350,000. The bill was not paid.
In response to the bankruptcy notice filed in the Federal Circuit Court, Mehajer's lawyers filed documents claiming he was able to pay his debts or there was "some other sufficient cause" why the court should not make an order to bankrupt him.
On Tuesday, Mehajer's barrister Jim T Johnson argued the bankruptcy notice was invalid because it did not attach relevant documents.
Federal Circuit Court Judge Justin Smith rejected the argument and declared Mehajer bankrupt. Mehajer's estate will now be managed by a bankruptcy trustee.
Salim Mehajer has been in jail since January 24 after he was refused bail over unrelated criminal charges.Credit: AAP
The legal costs of the application, totalling $20,524, will also come out of his estate.
The 31-year-old property developer and former councillor has been in jail since January 24 after he was charged with perverting the course of justice and conspiring to cheat or defraud over an allegedly staged car crash on October 16.
The Local Court has refused multiple applications by Mehajer to be released on bail. He told the court on March 7 he considered the bankruptcy notice as "second from death" in terms of seriousness and the matter was "an absolute mess".