Former Auburn deputy mayor Salim Mehajer has been declared bankrupt by the Federal Circuit Court.

The liquidator of his failed company SM Project Developments launched legal action against him in November over a $200,000 debt.

The bankruptcy application was supported by a range of creditors, including the Australian Tax Office and Prime Marble & Granite — the company that helped build an opulent staircase in his multi-million-dollar Lidcombe home.

The Greenacre business is still seeking payment but will now have to go through a trustee appointed by Judge Justin Smith.

Mr Mehajer's lawyer claimed the bankruptcy notice was invalid, but that argument was rejected by Judge Smith.

The marble staircase in Salim Mehajer's Lidcombe home. ( Picture: Surething Realty )

The order means Mr Mehajer's multi-million-dollar estate will be managed by a trustee who will take control of his financial affairs and deal with his creditors.

The ex-property developer will also be required to pay $20,524 in legal costs associated with the bankruptcy case.

The 31-year-old is currently in jail awaiting trial for allegedly staging a car crash to avoid a court appearance in October last year.

He was charged with perverting the course of justice and conspiracy to defraud.