Bolton Council last night officially decided that Martin Donaghy is no longer a councillor - even though a bankruptcy order has been set aside.
He will now have to fight a by-election on April 10 in his Daubhill ward if he wants to re-gain his seat.
However, it was unclear today whether he will be the Labour Party's candidate in the ward he has represented for the last 17 years.
Earlier in the day, a bankruptcy order made on February 5 without Mr Donaghy receiving notice of the hearing was set aside.
Bolton Council consulted a top Queen's Counsel and was advised that last month's hearing still disqualified him from being a councillor and a by-election would have to be held.
But after the hearing at Bolton County Court, Mr Donaghy's solicitor, Robert Talbot, said he was now eligible to hold public office.
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