One of the most common crimes committed by management board members is thwarting or impairing the satisfaction of creditors by disposing of company assets. Every debtor, including a management board member of a company facing insolvency or bankruptcy, must face strict liability for taking actions aimed at thwarting or impairing the ability to satisfy their creditors by:
- removal – i.e. changing the location of storing assets or getting rid of items from the estate
- disposal – i.e. disposal of property without the involvement of the debtor
- concealment – i.e. concealing assets, placing things in a place unknown to the debtor
- donation – i.e. free transfer of an item or property right or failure to take back a right or item transferred to the debtor
- destruction – i.e. damaging or rendering something unfit for use
as well as actual or apparent encumbrance or damage to assets . The Act provides for a prison sentence of up to 3 years . The second type of offense specified in this provision is an aggravated form, meaning that for its commission, the penalty that can be imposed is higher, up to 5 years . It involves taking actions to thwart the enforcement of a judgment of a court or other state authority by thwarting or depleting the creditor's assets through removal, concealment, disposal, donation, destruction, actual or apparent encumbrance, removal of signs of seizure, or damage to assets seized or threatened. Importantly, it is not required that the judgment whose enforcement the perpetrator seeks to thwart already existed at the time of the offense. This offense can also be committed when enforcement is imminent.
If the debtor has caused damage to many creditors , the prison sentence that can be imposed increases to 8 years .
The crime in question is classified as a motion crime, meaning one prosecuted at the request of an injured creditor. The crime will be prosecuted at the public prosecutor's office if the injured creditor is the State Treasury. The frustrated claim must be monetary in nature. Anyone can be the perpetrator of this crime, meaning anyone formally held liable.
By thwarting a creditor's satisfaction, we mean preventing the satisfaction of their claim, even partially. Diminishing satisfaction means preventing the satisfaction of their claim in any part, but not in its entirety. It will be irrelevant whether the debtor repays only a portion of their debts, as such behavior does not eliminate the threat of insolvency or the occurrence of such a state.
Bankruptcy Bankruptcy is declared when the debtor becomes insolvent. The concept of insolvency should be understood as the loss of the ability to meet due pecuniary obligations. A debtor who is a legal entity is also insolvent when their pecuniary obligations exceed the value of their assets and this condition persists for a period exceeding 24 months . A debtor is presumed to have lost the ability to meet due pecuniary obligations if the delay in meeting them exceeds three months . Bankruptcy or insolvency does not have to actually occur; the mere threat of their occurrence is significant .
The perpetrator of the offense may be the debtor or any person who, based on a legal provision, contract, or actual performance, manages the affairs of a legal entity, such as a member of the management board . The perpetrator must act intentionally with the intent to thwart or diminish the possibility of satisfaction. In the case of aggravated criminal offense, the debtor must act with direct and directed intent. A debtor may also be a surety, guarantor, or entity joining an existing debt. A debtor is also considered a debtor in rem, who is liable for the debt only from a specific component of their assets. a creditor : a natural person, a legal person, or the State Treasury.
If the act of disposing of assets has no real impact on the creditor's ability to satisfy their claims, it will not constitute a crime. Often, situations arise where the actions taken reduce the debtor's assets but may improve their financial situation in the future, ultimately leading to the satisfaction of creditors' claims.
In order to constitute the offence in question, the actions of the debtor must always lead to a reduction in his assets and at least a reduction in the possibility of fully satisfying the creditor .
Therefore, the basic form of defense in such a situation is to determine whether a given transaction was in fact intended to and led to the actual harm to the creditors, as well as to demonstrate that the actions taken by the management board member were economically justified.
The possibility of holding a company's management board member criminally liable, as regulated in Article 300 of the Penal Code, is another argument supporting the need for management board members to exercise due diligence in their duties and to monitor the company's situation on an ongoing basis. Therefore, individuals joining companies as management board members should be fully aware of the broad scope of obligations and potential consequences associated with their role on the company's management board.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of September 6, 2022
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