Victorian Liberal MP John Pesutto Liberal struggling to meet $2.3m deadline to avoid bankruptcy

Former Victorian Liberal leader John Pesutto is struggling to secure the $2.3 million he owes fellow Liberal MP Moira Deeming by Friday’s payment deadline, which may prompt her to ask a court to declare him bankrupt, according to party sources.

If Mr Pesutto cannot secure the money in the next two days, he plans to use a 21-day grace period before being bankrupted to raise the rest of the money from donors and party supporters. The Liberal MP has secured about one third of what he owes Ms Deeming, who successfully sued him last year for implying she sympathised with Nazis, the sources said.

The case may be one of the most expensive between two politicians in Australian history. Mr Pesutto’s chances of meeting the deadline are 50 per cent, one source with direct knowledge of the matter said.

Asked if he would have the money by Friday, Mr Pesutto told reporters on Wednesday: “I hope so. There’s a bit more time than that, but I do want to resolve this as quickly as I can.”

Ms Deeming’s lawyers increased the pressure on Mr Pesutto this week by threatening to sue three former Liberal premiers, Jeff Kennett, Ted Baillieu and Denis Napthine, along with other party figures who contributed to his case. Ms Deeming’s law firm said the ex-premiers and others may have to contribute to Ms Deeming’s huge legal costs because they were partly responsible for prolonging a case that Mr Pesutto could not afford to fight.

“Without those gifts, Mr Pesutto would not have been able to defend the proceedings or continue with his defence of the proceedings, particularly in the exhaustive manner he did,” the letter said, according to The Australian.

No legal precedent

The supporters have received advice that there is no legal precedent for donors in their position to be sued for legal costs, although a sympathetic court could allow Ms Deeming to see to emails, text messages and other messages between them, the sources said.

There is a danger the communications include embarrassing comments between prominent Victorian Liberals, which could become public and further damage the party’s reputation.

Even if Mr Pesutto is able to secure the other two thirds of what he owes Ms Deeming, and avoid immediate bankruptcy, he has legal fees of his own to repay that are estimated around $1 million.

Ms Deeming said this week’s legal threat was designed to find out who “asked him” to defend the case. “Being a lawyer, John knew better than anyone the legal and financial risks in refusing to apologise and retract his defamatory claims against me,” she said.

The next State election is scheduled for November, 2026. Bankrupts are not allowed to be members of parliament, and analysts believe Mr Pesutto’s seat of Hawthorn could be lost to an independent in a byelection.