Bankruptcy law, a traditional area of corporate criminal liability, comprises criminal offences contained in Title VI of Royal Decree no. 267 of 16 March 1942 (i.e., bankruptcy law). It therefore addresses cases of corporate crisis (in general, following a company’s declaration of bankruptcy) and is aimed at sanctioning particularly alarming actions or practices, which have made the correct distribution of assets among corporate creditors onerous or even impossible. Bankruptcy legislation has recently been subjected to a complete overhaul through legislative decree no. 14 of 12 January 2019, which introduced the code of corporate crisis and insolvency, aimed at replacing bankruptcy law, including criminal provisions contained therein. Following the definitive entry into force of this new textual amendment, scheduled for 15 August 2020, bankruptcy crimes will feature in title XI of this legislative decree (art.322-347), while ensuring legislative continuity with criminal offences as set out by bankruptcy law.
Bankruptcy crimes of a greater magnitude are those aimed at protecting the assets of the entrepreneur or company as a guarantee for claims on credit from third parties. It is worth stressing that, traditionally, offending conducts have relevance, in the eyes of bankruptcy law, only after a company is declared insolvent. Therefore, even offending conducts that go back in time may also be of interest to bankruptcy criminal law, if they have in some way contributed to company bankruptcy or caused an entrepreneur or a company to go bankrupt.
The relationship between the offending conduct being scrutinized and bankruptcy is precisely one of the most delicate aspects of bankruptcy law: while some believe that entrepreneurs should be criminally punished only where they have maliciously caused bankruptcy, others believe that fraudulent business conduct provides sufficient grounds for it, even if bankruptcy is not in any way deemed a consequence of such conduct or, indeed, even when bankruptcy occurs many years later.
In this context, the most significant bankruptcy offences are:
- Bankruptcy fraud and concealment of assets, which punishes misappropriation and dissipation of assets that have been greatly reduced or even squandered to the detriment of creditors. (art. 216, co. 1, no. 1).
- Bankruptcy fraud and concealment of documents (art. 216, co. 1, no. 2), which punishes omissions or grievous inaccuracies in corporate accounts to the extent that the actual reconstruction of a company’s total assets is made impossible.
- Bankruptcy and unfair preference, aimed at punishing the preferential treatment of certain creditors over others, thus violating the principle of creditor equality.
- Reckless bankruptcy, (Article 217), which, ultimately with respect to cases of bankruptcy fraud, punishes a series of heterogeneous actions, which may also have been committed through negligence, imprudence or inexperience: the causes leading to the decrease in the entrepreneur’s assets with the consequent damage to the guarantee of creditors (so-called reckless bankruptcy); non-fulfilment of obligations undertaken in a previous arrangement with creditors or bankruptcy agreement; the omission or submission of irregular or incomplete accounting books or other accounting records required by law, which could be detrimental to the interest of creditors in the full and correct demonstrability of the entrepreneur’s financial situation (destruction and falsification of company documents).
- Please note that the aforementioned cases, literally punishing the entrepreneur, are also applicable to top corporate governance bodies, as established by art. 223 of bankruptcy law.
- Misuse of a line of credit (art.218), which protects not only total liabilities, but which also ensures the winding-down of a company that does not produce wealth, but instead destroys it by continuing to rely on loan financing rather than filing for bankruptcy.
Baccaredda Boy Law Firm has provided its legal assistance in high-profile criminal trials in which bankruptcy crimes were prosecuted, such as the Banco Ambrosiano affair, the so-called “Parmalat crack” and the bankruptcy trial over the Tecnosistemi Group. It also offered legal protection to banking executives where liability cases of corporate collapse of provisionally administered companies were concerned.
Due to the sensitivity and complexity of these cases, Baccaredda Boy Law Firm relies on established civil and commercial law consultants in a bid to provide thorough assistance, which is central to tackling complex issues.
Last but not least, Baccaredda Boy Law Firm offers an in-depth analysis of bankruptcy offences through conferences, study groups and publications. In this respect, please refer to the relevant section.