Independent Senator Rod Culleton has been declared bankrupt by the Federal Court in Perth, which would disqualify him from parliament, but he has vowed to fight on.
Justice Michael Barker on Friday granted a 21-day stay on the bankruptcy order.
The WA District Court had ordered Senator Culleton to pay former Wesfarmers director Dick Lester $205,536 in 2013 - which has since increased to $280,000 - over unpaid rent relating to a $13.2 million 2009 property acquisition deal that soured.
"I am satisfied that the respondent debtor committed the act of bankruptcy alleged in the creditor's petition," Justice Barker said.
"None of the various grounds of objection of the respondent debtor are made out."
Senator Culleton was visibly frustrated by the decision and told reporters outside court that he was already prepared for an appeal.
"We've still got legal avenues so we can appeal," he said.
"I can still stand as a senator and I'll fight it to the end. This is my livelihood, not only for me, but for my children."
Senator Culleton described his situation as being in a legal rip.
"I'll just float on my back for a while and swim to the side because I'm not bankrupt at the moment," he said.
"I'm not going to panic, I've been in these positions before and come out of it."
Before the judgment was handed down, Senator Culleton applied to reopen the bankruptcy hearing, claiming he did not fully cover his case on Monday due to the presence of former friends Frank Bertola and Bruce Bell, but Justice Barker rejected the application.
The farmers claim they are owed money by the senator and provocatively sat at a bar table that is usually reserved for lawyers during Monday's hearing.
Senator Culleton had a heated argument with Justice Barker, demanding they be removed because his wife Ioanna had taken out violence restraining orders against them, then stormed out.
The police arrived and arrested the pair, who are also legally challenging Senator Culleton's eligibility as an MP.
Senator Culleton claimed on Friday that he had not been given a fair go in court and the experienced judge had sharpened his knives after previously reserving his decision.
"He was pretty quick to use them, he was quicker than my local butcher," he said.
"I've worked too hard for some single judge to turn around and just strip all my assets. Who's he to do that?"
Asked why he didn't just repay the debt, he replied: "There is no debt."
Senator Culleton was elected in the July federal election as a representative of Pauline Hanson's One Nation but resigned on Sunday from the party.
"I feel sorry for Rod Culleton and his family but this was the right ruling. I hope he now acts honourably and steps down with dignity," the One Nation leader tweeted.
