A group fighting a $1.55 million loan given to a former Liberal leader who was facing bankruptcy have agreed to participate in mediation.

Colleen Harkin, a member of the Victorian branch's administrative committee, in June launched the Supreme Court challenge against the loan handed to John Pesutto.

Mr Pesutto had been ordered to pay $2.3 million in legal costs to MP Moira Deeming after the Federal Court found he defamed her by implying she was associated with neo-Nazis.

He paid $315,000 in damages and raised about $750,000 through wealthy backers and a GoFundMe campaign, with the remaining $1.55 million in costs leaving him facing bankruptcy.

The Victorian Liberals' administrative committee in a June 19 meeting agreed to loan Mr Pesutto the $1.55 million, but Ms Harkin and four other

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