Salim Mehajer declared bankrupt by judge

Controversial Sydney businessman Salim Mehajer has been declared bankrupt by a Federal Circuit Court judge.

Former Auburn deputy mayor Salim Mehajer has been declared bankrupt (file). (AAP)

On Tuesday, Judge Justin Smith rejected his lawyer's argument that the bankruptcy notice was invalid.

The order means the estate of the former Auburn deputy mayor will be managed by a trustee who will take control of his property and financial affairs and deal with his creditors.

The petitioning creditor for the bankruptcy order was the liquidator of Mehajer's own company, SM Project Developments, over a debt of about $200,000.

Other creditors, including the Australian Taxation Office, supported the application.

Mehajer, 31, was not in court on Tuesday, having been refused bail three times over claims he staged a car crash and defrauded an insurance company.