New Zealand Law
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The problem with any power of attorney is whether the person giving this had the capacity to understand what she was signing. Normally each party has to get independent legal advice so your mother should have had this separate advice. If at the time she signed the later POA you believe she was not capable, and she did not get independent advice, the POA may not be valid. To challenge this you would need to apply to the Family Court to have a property manager appointed instead of the POA.
The policy will have passed back to your mother, as your fathers heir, but when she dies, there will be forms to complete to get the policy paid out.
Your brother can be charged with theft if he has taken money from your mother like this, so you may need to consider that option. But certainly with proof of theft it will be easy to replace him, and I would suggest you start by telling him that if he just destroys his POA and reverts to yours, then that will be the end of the matter, but that he should also repay the money. If he refuses then you will need to apply to replace him and likely complain to the police.
yOur husbands bankruptcy will not affect the POA however