CONTROVERSIAL Sydney businessman Salim Mehajer has been declared bankrupt by a Federal Circuit Court judge after one of his companies failed to pay a debt of over $200,000.

The company that built a lavish marble staircase in the 31-year-old's $3 million Lidcombe home served a bankruptcy notice on him in November last year, the Daily Telegraph reported.

The former Auburn deputy mayor was ordered to pay over $1 million for the staircase and legal costs. The bill was not paid.

His barrister, Jim T Johnson, argued that the bankruptcy notice was invalid because it did not attach relevant documents, Fairfax Media reported.

Judge Justin Smith rejected his lawyer's argument that the bankruptcy notice was invalid, and ordered Mehajer to pay Prime Marble & Granite Pty Ltd's legal costs of $21,024.

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.

Mehajer is currently in prison, where he awaits trial after he was charged with allegedly staging a car crash in October last year to avoid a court appearance.

Earlier this month, he told the court his life was "an absolute mess", saying he "didn't deserve to be" in prison.

"I am here between four walls and letting everything collapse ... this is going to be a catastrophe," he said.

Earlier this month, the disgraced businessman was placed on a good behaviour bond for assaulting a taxi driver with an EFTPOS machine last April.

In February, he was found guilty of assaulting a television reporter when he slammed his car door on her arm.

- More to come

'Silly mistake' on road costs motorist $700

premium_icon 'Silly mistake' on road costs motorist $700

Police were called to a single vehicle crash

'Mortified': Motorist had few drinks before Boyne crash

premium_icon 'Mortified': Motorist had few drinks before Boyne crash

Court hears man was under influence during round-a-bout crash