Article 586 of the Commercial Companies Code provides for criminal liability of management staff of commercial companies for failure to file a bankruptcy petition in a situation where the conditions arising from the provisions of bankruptcy law have been met.
Failure to file a bankruptcy petition within the deadline is subject to a fine, restriction of liberty or imprisonment for up to one year.
So when is the deadline for filing a bankruptcy petition?
Pursuant to Article 21, Section 1 of the Bankruptcy Law, the deadline for filing a bankruptcy petition with the Court expires no later than 30 days from the date on which the basis for declaring bankruptcy occurred.
Protection purpose
The purpose of Article 586 of the Commercial Companies Code is to protect the broadly understood security of trading. This provision is primarily intended to protect the financial interests of the company's shareholders, its creditors, and other third parties, as timely filing of a bankruptcy petition also prevents these parties from entering into financial relationships with the insolvent commercial company.
Who is subject to criminal liability?
Representatives of legal doctrine, as well as court decisions, have created two concepts of criminal liability of managerial staff.
The first of these concepts individualizes the liability of management board members. This means that in multi-member management boards, criminal liability is borne by a management board member who, through their conduct, for example, by concealing key information, prevents or hinders the ability of other management board members to file a bankruptcy petition. In a situation where there is a clear division of responsibilities, for example, by designating a management board member responsible for managing the company's financial affairs, it can also be demonstrated that the other members lacked the competence to properly assess whether a situation requiring the filing of a bankruptcy petition exists.
The second concept states that it does not matter if the management staff, within the framework of a clear division of competences, does not deal with financial matters and has no competences in this area, indicating that in such a case these are only internal arrangements and all members of the company's management board are responsible.
Managers may be released from liability if they prove that restructuring proceedings have been opened or that an arrangement has been approved in the arrangement approval proceedings.
Moreover, in a situation where there were reasons guided by the management board that influenced the delay in the decision to file for bankruptcy and are based on evidence, the members of the management board may be released from criminal liability or the degree of their guilt may be reduced.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of December 6, 2023.
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