Victorian Liberal MP Moira Deeming is embroiled in a new legal and financial challenge, with a prominent benefactor reportedly initiating proceedings for loan repayment. The demand for funds stems from her successful defamation case and could potentially lead to bankruptcy, adding further strain to the already fractured state of the Liberal Party.

Insiders close to the party confirm that lawyers representing New South Wales-based property developer Hilton Grugeon have formally requested the repayment of funds that bankrolled Ms Deeming’s victorious defamation action. Mr Grugeon's substantial financial support was crucial to her legal fight against former Opposition Leader John Pesutto. While Mr Grugeon continues to express support for Ms Deeming, sources suggest this latest request could be the precursor to bankruptcy proceedings.

The intricate financial web began with Ms Deeming’s successful Federal Court defamation case against Mr Pesutto, where he was ordered to pay $2.3 million in legal costs after the court determined he falsely implied she associated with neo-Nazis. To prevent Mr Pesutto's bankruptcy and a consequential by-election in his marginal Hawthorn seat, the Liberal Party last year agreed to loan him $1.55 million to cover a portion of Ms Deeming's fees. This significant sum is currently held in a trust account by Ms Deeming's legal representatives.

However, the release of these funds has been complicated by a challenge from a dissenting faction of Liberal leaders. Six current and former members of the Liberal state executive have lodged an application with the Supreme Court, arguing the loan to Mr Pesutto breaches the party's constitution. They are seeking an injunction to prevent the money's disbursement, a matter slated for a hearing this month. This ongoing legal battle means Mr Grugeon remains unrepaid, and Mr Pesutto's debts, though facilitated by the party, are technically unsettled.

The financial pressure on Ms Deeming coincides with her ongoing struggle to retain her preselection. Earlier this week, Ms Deeming had been due in the Supreme Court for a separate matter challenging the state executive's intent to revoke her preselection. However, she has since announced her withdrawal from this particular case. The party's push to disendorse Ms Deeming stems from her refusal to apologise to fellow MP and former leader Matthew Guy, whom she accused of assault.

The allegation against Mr Guy arose from an interaction at a crowded Macedonian community function in May, where Ms Deeming claimed she was "grabbed, held and pulled with force," causing "pain and distress." CCTV footage of the event was reviewed by Victoria Police, who subsequently found no offense had been committed. Despite conceding she might have misunderstood the precise meaning of the word "headlock," Ms Deeming has maintained she made the allegation in good faith and has steadfastly refused to retract her statement or apologise to Mr Guy, a stance supported by Opposition Leader Jess Wilson.

Facing disendorsement, Ms Deeming recently submitted a 12-page statement to the state executive, presenting a mediation proposal in a last-ditch effort to secure her candidacy for the November election. In a cover letter accompanying her submission, she highlighted the severe financial implications, stating, "I am already facing bankruptcy for over $1.55 million in legal costs that a former Liberal leader was ordered by the Federal Court to pay to me." She asserted that her injunction had achieved its aim, providing the executive with the evidence needed to decide on mediation or disendorsement. Nevertheless, sources indicate the Liberal Party is currently disinclined to entertain her mediation efforts.

When questioned on Thursday regarding Ms Deeming's decision to withdraw her injunction action, Opposition Leader Jess Wilson declined to comment, stating only that the matter was "still before the courts." Ms Wilson, who is a member of the Liberal Party’s Victorian executive, also refrained from speculating on whether the executive would proceed with disendorsement when it convenes next Thursday. This relentless internal discord has proven a significant distraction for the opposition, particularly as it embarks on a campaign to visit all 88 Victorian seats during parliament's winter recess, diverting focus from their broader political agenda.