UPDATED at 7:27 p.m.

Jeff Manning and Hillary Borrud | The Oregonian/OregonLive

Three years since ending her controversial tenure as Oregon's first lady, the legal headaches continue for Cylvia Hayes.

Hayes will file for bankruptcy this week, her lawyer indicated in a court filing Wednesday, in part to get out from under about $125,000 in debts and penalties she accrued in her legal battle to keep her emails secret. She also faces a potential six-figure fine for violating state ethics laws.

Her attorney, Eli Stutsman, informed the Oregon Court of Appeals of Hayes' plans on Wednesday.

UPDATE: On June 15, 2018, the court dismissed her appeal, designating The Oregonian/OregonLive as the prevailing party. As of that date, Hayes had not filed for bankruptcy.

The Oregonian/OregonLive filed a public records request for Hayes' emails discussing state business in late 2014, after questions arose about the overlap between her public role and private contracting. But Hayes argued she was not subject to public records laws.

Attorney General Ellen Rosenblum and a Marion County judge ultimately sided with The Oregonian/OregonLive. But Hayes sued the news organization in 2015 in an effort to block the public records request. After losing that round, she was ordered to pay about $125,000 in legal fees. Then, she appealed.

Hayes will now drop the appeal in anticipation that bankruptcy will shield her from paying the news organization's full legal costs.

"Appellant will soon file for bankruptcy protection and this court's decision, whether affirming or reversing, will not alter appellant's decision to file for bankruptcy protection," Stutsman wrote in his motion. "Either way, win or lose on appeal, appellant will soon seek bankruptcy protection and there is no need or benefit for any party or the court to incur further time on this matter."

Cylvia Hayes negotiating fines for ethics violations

Hayes became first lady after her fiancé, Gov. John Kitzhaber, was elected to his third term in 2010. From the start, there were questions about how Hayes would support herself because her consulting business had increasingly relied on government contracts.

Her work came under fresh scrutiny weeks before Kitzhaber was elected to a fourth term in 2014. The influence-peddling scandal peaked in February 2015 when Kitzhaber resigned just weeks after his swearing in. State and federal officials launched criminal investigations, though both inquiries wrapped up last year with no charges filed.

In January, Oregon's ethics watchdog found that she misused her position as first lady and a policy adviser to secure consulting contracts worth more than $200,000.

Hayes' lawyers and the ethics panel are now trying to reach a settlement on the fines, which could run as much as $110,000.

The dispute over who should pay the cost of the news organization's public records battle is one of the last unresolved questions from the Kitzhaber and Hayes scandal. After a Marion County judge found Hayes was subject to public records law, it cleared the way for a separate judge to review more than 72,000 emails. Nearly two-thirds of those messages were ultimately released.

The news organization subsequently filed a motion to recover attorney fees, as allowed under state records laws. At the time, Hayes' attorney responded in court documents by saying the award would punish her for protecting her personal documents and her right against self-incrimination. But in March 2016, a judge ordered Hayes to pay those costs. She filed an appeal that summer.

Although Hayes was given two public defenders in the federal investigation, she and Kitzhaber have accrued large legal bills.

In late March, The Oregonian/OregonLive filed a lien on her Bend home to preserve its place in line among her creditors.

--Jeff Manning and Hillary Borrud