Bankruptcy Prosecution Risks
Ilya Sazonov lists the crimes that could be committed during the bankruptcy procedure and describes the possible risks of criminal prosecution for entrepreneurs
The bankruptcy procedure itself is completely legal; it is a reboot, an opportunity to start life from scratch. The main condition for the occurrence of such legal consequences as the bankruptcy procedure is the inability of the debtor to make payments on his obligations within three months. If the debtor obviously understands that he will not be able to fulfill any financial obligations, including paying salaries, then regardless of the amount of the debt and the period of delay, the debtor has the right to apply to the arbitration court with a statement declaring it insolvent bankrupt.
The Criminal Code of the Russian Federation defines crimes that can be committed in the course of bankruptcy proceedings:
Illegal actions in bankruptcy (Article 195 of the Criminal Code of the Russian Federation), the maximum punishment is imprisonment for up to three years.
Deliberate bankruptcy (Article 196 of the Criminal Code of the Russian Federation), the maximum punishment is imprisonment for up to six years.
Fictitious bankruptcy (article 197 of the Criminal Code of the Russian Federation), the maximum punishment is imprisonment for up to six years.
Falsification of financial documents of accounting and reporting of a financial organization (article 172.1 of the Criminal Code of the Russian Federation), the maximum punishment is imprisonment for up to seven years.
A mandatory factor for criminal prosecution under articles 195,196,197 of the Criminal Code is the infliction of major damage. Major damage is recognized from bankruptcy crimes in excess of 2,250,000 rubles.
Deliberate bankruptcy means that actions (inaction) aimed at artificially creating the inability of the debtor (legal entity, citizen, individual entrepreneur) to fully satisfy the requirements of creditors for monetary obligations and (or) to fulfill obligations to pay mandatory payments.
The main purpose of this crime is to create or increase the insolvency of the debtor with the goal of bankruptcy and concealment of existing assets. In case of fictitious bankruptcy, the guilty person (s) makes a deliberately false public announcement of bankruptcy, for example, with the aim of forcing creditors to make various concessions, and not with the aim of real bankruptcy.
In the case of a fictitiously declared bankruptcy, in contrast to intentional bankruptcy, the debtor has and still has a real opportunity to satisfy in full all the claims of his creditors at the time of the declaration of insolvency.
The Ministry of Internal Affairs and the Federal Tax Service supported the abolition of articles of the Criminal Code on intentional and fictitious bankruptcy due to their inefficiency. The statement was made at a meeting of the public council at the Ministry of Internal Affairs in April 2019. The indicated articles of the Criminal Code of the Russian Federation are rarely used, since the actions of offenders may be covered by other components of the code. For example, the withdrawal of assets is often qualified under Article 159 of the Criminal Code (fraud) and Article 160 of the Criminal Code (misappropriation or embezzlement). According to the Ministry of Internal Affairs for 2017-2019, more than 250 cases were initiated under articles on intentional and fictitious bankruptcy, and about 80 people were prosecuted for this period.
Our recommendation: if the debtor is conscientious and does not intend to harm creditors, then bankruptcy should not be feared. As practice shows, this is the only way out of this situation.