Three weeks to pay: Moira Deeming moves to bankrupt John Pesutto

Lawyers for Moira Deeming have launched bankruptcy proceedings against former Victorian Liberal leader John Pesutto over his failure to pay court-ordered costs.

Moira Deeming’s legal team has launched bankruptcy proceedings against former Victorian Liberal leader John Pesutto over his failure to pay $2.3m in court-­ordered costs following a defamation loss.

A bankruptcy notice was filed in the Federal Court on Monday, escalating the fallout from the protracted legal battle between Mrs Deeming and her one-time leader.

Mr Pesutto now has 21 days to pay the debt in full or negotiate a payment plan, or risk being declared bankrupt – a move that would force him from parliament and trigger a high-stakes by-­election in the marginal seat of Hawthorn.

If declared bankrupt, Mr Pesutto would be ineligible to serve as an MP and plunge the state Liberals into further turmoil by placing his electorate at risk of falling to Labor.

Liberal member for Hawthorn John Pesutto MP. Picture: Jake Nowakowski

In a statement after the legal action, Mr Pesutto said he would try to clear the debt by the due date. “With the issuing of a Bankruptcy Notice today, I will be doing everything possible over the next 21 days to pay the amount ordered by the Federal Court.

“I will continue performing my work as a member for Hawthorn, and I reiterate my wish to do so for as long as the people of my electorate will have me.”

One-third of the $2.3m has been raised so far, including $200,000 from online crowd-funding and $500,000 that Mr Pesutto has secured privately.

Former Victorian premier Jeff Kennett issued a last-ditch plea to the Liberal Party’s administrative committee to consider loaning Mr Pesutto the funds so he can avoid bankruptcy.

The administrative committee is an elected body whose membership includes party president Phil Davis, state leader Brad Battin and federal MP Dan Tehan.

In a penned letter to 19 members of the committee, Mr Kennett said the party urgently needed to find a resolution.

“The thrust of the letter is for a committee meeting to take place shortly and come up with a solution as soon as possible,” Mr Kennett told The Australian.

“It is wrong that one of our colleagues should be threatened with bankruptcy for doing their job,” he wrote in his letter.

“Yes, the court decided some of his words were inappropriate, in fact defamatory. But that does not change the principle of … the party’s need to back our own.

“The matter can be resolved quickly by the party and its agencies if we pay the outstanding claims on JP (Mr Pesutto).”

Moira Deeming speaks to the media at Parliament House in Melbourne after being accepted back into the Liberal Party. Picture: NewsWire / Andrew Henshaw

The escalation comes after the NSW property developer who bankrolled Mrs Deeming’s legal fees, Hilton Grugeon, pledged to pay whatever it took to pursue Mr Pesutto’s donors – including three former Victorian premiers – should he be unable to pay his costs bill.

The Australian revealed last week that a letter from Mrs Deeming’s lawyers had flagged seeking non-party cost orders against those who donated to Mr Pesutto’s failed defence should he declare bankruptcy.

In a letter published last week, Mrs Deeming said the decision to initiate bankruptcy proceedings was not one she took lightly. “My goal is simple: to ensure I am reimbursed so I can repay that loan, as I promised I would,” she said. “After being falsely accused of bigotry, of knowingly associating with Nazis – claims the court found to be defamatory – I faced a torrent of public and private abuse, including rape threats, stalking and personal and professional humili­ation and isolation. Sadly, I was not the only innocent woman who suffered as a result of the campaign to expel me.

“This moment should never have come to pass. Since it has, let it stand as a reckoning – not just for one individual, but for a culture of political brutality that must end.

“No man is above the law.”