The Crime of Fraudulent Bankruptcy and Simple Bankruptcy
Legal guide to the crimes of bankruptcy (simple and fraudulent) provided for and punished by the articles 216 and 217 of the bankruptcy law
What is bankruptcy
Bankruptcy is a crime that occurs whenever an entrepreneur or a company declared bankrupt with a sentence by the judicial authority puts in place imprudent actions to prevent creditors from rebuilding their personal or social assets. It is not possible to provide a unambiguous definition of bankruptcy because the bankruptcy law contemplates various figures. These are distinguished by the different behaviors and the different psychological states necessary for the different cases to be configured. It follows that the common constituent element of the various types of bankruptcy is the judicial declaration of bankruptcy of the commercial entrepreneur or company that become criminally responsible because of their conduct.
The normative references
Bankruptcy is contemplated by the Bankruptcy Law (Royal Decree No. 267 of 16.03.1942), modified by the DL n. 59 of 3.05.2016, converted and modified by Law n. 119 of 30.06.2016 in force since 3.07.2016. Articles 216 and 217 of the bankruptcy law respectively contemplate the crime of fraudulent bankruptcy and simple bankruptcy. The competition in the actual crimes of bankruptcy is regulated by the art. 223 bankruptcy law to be interpreted together with articles 216 and 217.
The fraudulent bankruptcy is characterized by the fraud committed by the entrepreneur or by the company directed to aggravate his state of insolvency to his exclusive advantage and to the detriment of the legitimate claims made by the creditors. To better understand the meaning of the provision, it is therefore necessary to define the insolvency status of the failed subject, according to the provisions of art. 5 of the bankruptcy law: ” 1. The entrepreneur who is in insolvency is declared bankrupt. 2. The state of insolvency is manifested by defaults or other external facts, which prove that the debtor is no longer in able to meet its obligations regularly The crime of fraudulent bankruptcy contains within it three different types of offenses: distraction, preferential and documentary.
Fraudulent bankruptcy due to distraction
The crime occurs when the entrepreneur or the company administrator subtracts, distracts, hides or destroys assets and financial resources from his assets or from the collective to enrich himself, while depriving the creditors of any form of capital guarantee on which to satisfy oneself ( Criminal Court of Cassation, Section V, No. 18981 of 6 May 2016 )
The preferential fraudulent bankruptcy
In this hypothesis, the subject or company declared bankrupt only pay some of the creditors to the detriment of others. This conduct is harmful because one of the principles upon which the management of the bankruptcy estate is based is that of the pars condicio creditorum. By virtue of this rule, every creditor has the right to satisfy his claims about the bankrupt’s estate in equal conditions ( Criminal Cassation, Section V, No. 35365 of 08/23/2016 )
Fraudulent documentary bankruptcy
When a person decides to carry out a commercial activity, he must complete, keep and keep certain accounting books. The legal form with which one chooses to carry out business activity has significant repercussions also on the complexity of the records and accounting books required by the law for administrative, legal and fiscal purposes. The entrepreneur who falsifies, destroys or subtracts the accounting books in order to obtain an unfair profit, thereby damaging his creditors ( Criminal Cassation, Section V, No. 24059 of 9.06.) Is responsible for the crime of fraudulent bankruptcy. 2016 )
In this case the crime occurs because the declared bankrupt person does not behave in such a way as to intentionally cause damage to the creditors. From his conduct, however, a reckless and imprudent management of entrepreneurial activity emerges because:
– incurred personal expenses that were out of proportion to his real economic possibilities,
– has carried out clearly imprudent financial transactions,
– has implemented imprudent actions to delay bankruptcy ( Cassation, Section V, Penalty, No. 35708 of 09.06.2015� 26.08.2015)
– has aggravated his condition by not asking for bankruptcy personally or committing any other serious fault,
– has not fulfilled the obligations arising from a previous bankruptcy procedure,
– did not keep the records for the three years preceding the bankruptcy ( Criminal Cassation No. 5246 of 09.02.2016 )
The competition in the crime of bankruptcy
Bankruptcy is a crime of its own which presupposes specific qualities of the subject: entrepreneur or company declared bankrupt by the judicial authority. This does not mean that an external party cannot compete in the crime. The competition of the extraneus in the crime of fraudulent bankruptcy is governed by the combined provisions of the art. 216 – 217 and 223 of the bankruptcy law. The recent Criminal Court of Cassation n. 8349 of 01/03/2016, recalling previous jurisprudence, defined the competition in fraudulent bankruptcy as follows: abile the competition in the crime of fraudulent bankruptcy by a person not involved in the bankruptcy can be configured if the conduct carried out in competition with the bankrupt was efficient for the production of the event and the third competitor has operated with the awareness and the willingness to help the entrepreneur fail to frustrate the obligations established by law to protect the company’s creditors (Cassation, Section V, No. 27367 of 26 / 04/2011).