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Can I run my own business while bankrupt?

FAQs | Running a Business While Bankrupt

You can operate a business while bankrupt but there are some rules you will need to follow:

  1. You cannot have stock while bankrupt as the stock will vest in your bankrupt estate as after-acquired property. You can however hold stock on consignment from a third party.
  2. You must have your name in the title of the business, for example, Crystal Clear Window Cleaning by Billy Bloggs. If you do not use your name as part of your business name, you are required by law to disclose to all your customers that you are bankrupt.
  3. If you have a trade credit account or otherwise obtain credit or undertake to supply goods and services, and the amount exceeds $5,934 you will need to inform the credit provider or the person you are dealing with that you are bankrupt.
  4. You can only operate the business as a Sole Trader.

Other things to note:

  1. You may find it difficult to obtain Public Liability Insurance, talk to an insurance broker they may be able to help you if your current insurer is unwilling to provide you the cover.
  2. Bankruptcy may affect your ability to work in some professions or industries. If you are a member of a professional or licensing body check to see if bankruptcy is a limiting/disqualifying factor.
  3. The ATO will be notified of your bankruptcy. If you have an ABN, the ATO will usually deactivate your ABN, this is standard practice. All you will need to do is contact the ATO and ask them to reactive your ABN, which they will do without issue.
  4. You cannot be a director or manage a company while bankrupt. Section 206B of the Corporations Act 2001.

For further information on bankruptcy, we recommend our articles ‘Pathways to Bankruptcy – Essential Facts’, ‘Life During Bankruptcy’ and ‘The Bankruptcy Option Explained’.

Nicholls & Co have a complementary ‘help desk’ to answer your questions on bankruptcy. Call Nicholls & Co on 1300 060 122 or email

Alan Nicholls - Registered Trustee

Alan Nicholls’ no obligation help desk

Nicholls & Co provide a free, no obligation ‘help desk’ for people considering bankruptcy – we discuss and explain bankruptcy and answer questions for anyone who is considering bankruptcy. The Nicholls & Co help desk can be accessed by phone  
1300 060 122  or . Alan Nicholls, Registered Trustee in Bankruptcy is also available to answer your questions to enable you to decide if bankruptcy is right for you.