Can a Sole Trader Do a Small Business Restructuring (SBR)?

Short answer: No. A sole trader cannot enter into a Small Business Restructuring (SBR) plan.

SBR is a formal restructuring process under the Corporations Act that only applies to companies (Pty Ltd). A sole trader is not a separate legal entity, so the SBR framework does not apply.

Who SBR Is For

- Australian Pty Ltd companies with debts under $1 million (including ATO)

- Where the company is still viable and trading

- Director remains in control while a Registered Restructuring Practitioner manages the plan

Who SBR Is Not For

- Sole traders

- Partnerships without a company structure

- Trusts without a corporate trustee

What a Sole Trader Can Do Instead

Because your personal and business debts are legally the same, a sole trader has access to personal debt resolution options:

1. Informal Creditor Negotiation

Useful when debts are small or the situation is temporary. This may include:

- Asking for payment plans

- Requesting interest or penalties to be waived

- Negotiating settlements

2. Part IX Debt Agreement (if eligible)

A formal, legally binding compromise with creditors.

- Works best for unsecured debts

- Requires meeting income, asset and debt thresholds

3. Bankruptcy

When debts cannot be realistically repaid.

- Clears unsecured debts

- Stops creditor pressure, legal action, and most enforcement

- Can continue trading as a sole trader using your own name

4. Section 73 Composition (Post-Bankruptcy Proposal)

A negotiation to exit bankruptcy early by offering creditors a lump sum or structured repayment.

How to Work Out the Best Option

Your situation needs to be assessed based on:

- Total debts and who they are owed to (ATO, suppliers, banks, etc.)

- Personal income and assets (house, vehicles, tools of trade)

- Whether business needs to continue trading

- Whether legal action has already started

If You Want to Keep Trading

Most sole traders can continue trading even after bankruptcy, as long as they:

- Use their own personal name OR

- Disclose the bankruptcy status if trading under a business name

Many small business owners rebuild successfully after clearing unmanageable debt.

Need Straight Advice, Not Scare Tactics?

I help business owners understand the real options, without judgement and without pushing an agenda.

If your business is under pressure, contact me and we will map out a clear, practical path forward.

Experienced. Straight-talking. Confidential.

Call: 0455 455 099