Kathy Jackson might be bankrupt but the Health Services Union is continuing in its pursuit of more than $2.5 million from its former boss.
Ms Jackson is accused by the HSU of acting outside her authority while national secretary by spending $660,000 of members' funds on personal expenses such as holidays and shopping.
She was due to front the Federal Court on Monday for a two-week hearing but did not show up.
Instead, the court heard she had declared bankruptcy and the matter was stood down while the union decided what it wanted to do.
By the afternoon, barrister for HSU Mark Irving was able to tell the court the union wanted to push ahead with suing the former corruption whistleblower for "in excess of" $2.5 million, including costs.
"It dwarfs the other liabilities Ms Jackson says she has, by a rate of 100 to one," he said, referring to a document filed by Ms Jackson that states, aside from a mortgage, her liabilities are about $25,000.
Mr Irving said he would file an application seeking leave to proceed on behalf of the HSU.
The union also wants to freeze Ms Jackson's assets.
Justice Richard Tracey extended an order on Monday preventing the transfer of a coastal NSW property, which was bought for $1.3 million in 2011.
The union alleged Ms Jackson was trying to transfer the property to her partner, Fair Work Commission vice-president Michael Lawler, to thwart the lawsuit.
In documents tendered to the court last week, Ms Jackson denied moving her assets out of union reach and challenged HSU to produce evidence supporting its "false claim" against her.
Ms Jackson said she discussed selling the property to Mr Lawler last year, to pay for mounting legal fees, and the pair were advised it was lawful.
Mr Lawler told her the sale would need to proceed with independent valuation, because it would be scrutinised by "your enemies" and they will "scream that it is crooked".
"It is a matter of complete coincidence that the transaction is being completed at this time and in no way reflects a perception by me that I am likely to be found liable," Ms Jackson said in the statement.
Mr Lawler did not appear in court on Monday but was represented by barrister James Johnson, who delivered the news of Ms Jackson's bankruptcy.
A trustee appointed to deal with Ms Jackson's affairs also sought an adjournment of the civil hearing to seek legal advice.
Justice Tracey adjourned the matter to Friday.
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