Declaration of non-existent creditors and other breaches

Declaration of non-existent creditors: offence and defence

Article 327 of the Code of Business Crisis and Insolvency protects the correct reconstruction of the assets of the entrepreneur subject to judicial liquidation and the reliability of the information needed to conduct the proceedings.

The provision does not concern only the declaration of non-existent creditors, but also covers further breaches committed by the entrepreneur during judicial liquidation. Correct legal qualification is particularly important in order to distinguish this offence from the more serious forms of fraudulent bankruptcy and from the conduct of a creditor filing a claim based on a fraudulently simulated credit.

When the offence arises

Article 327 punishes the entrepreneur in judicial liquidation who, outside the cases provided for by Article 322:

• declares non-existent creditors in the list of creditors
• omits to declare the existence of other assets to be included in the inventory
• fails to observe the further specific obligations referred to by the provision

The offence therefore protects the correctness and completeness of the information the entrepreneur must provide to the bodies of the proceedings. Not every error in indicating a credit or in representing the asset situation is automatically criminally relevant: the specific conduct charged, the nature of the inaccurate or omitted information and the subjective element required by law must be verified.

The perpetrator

The offence under Article 327 is a special offence whose perpetrator is the entrepreneur subject to judicial liquidation.

The subjective delimitation is particularly relevant in proceedings concerning companies and complex business structures, where the specific provision applicable to the natural person charged must be identified.

It is therefore incorrect to automatically extend the subjective qualification under Article 327 to directors, general managers or liquidators of companies without verifying the rules specifically applicable to their position.

The declaration of non-existent creditors

The first conduct covered by the provision consists in indicating, in the list of creditors, a person holding a credit that does not actually exist. The criminal assessment first requires verification of the actual existence of the underlying obligation.

Contractual documentation, accounting records, payments made, correspondence between the parties, the cause of the credit and any other element capable of reconstructing its origin, extent and possible extinction are therefore relevant.

The non-existence of the credit must also be distinguished from its mere contestability. A disputed credit, uncertain in amount or subject to civil litigation, cannot automatically be equated with a non-existent credit for criminal purposes.

The omitted declaration of assets

Article 327 also attaches criminal relevance to the failure to declare the existence of other assets to be included in the inventory.

Here too, the knowing and criminally relevant omission must be distinguished from an error in reconstructing the assets, from uncertainty as to ownership, or from situations where actual availability of the asset is objectively disputed.

The assessment must therefore concern both the actual ownership or availability of the asset and the knowledge the entrepreneur had of it when he was required to declare it.

The subjective element and the negligent form

A distinctive feature of Article 327 is the express provision also of liability for negligence. In the intentional form, awareness and will of the conduct charged must be established: as regards the declaration of the credit, awareness of its non-existence is therefore relevant.

The second paragraph provides, however, that where the act occurred through negligence, imprisonment of up to one year applies. The distinction between intent and negligence is therefore central to the defence: it must be verified whether the inaccuracy stems from a knowing false representation or from carelessness, imprudence, lack of skill or an error in reconstructing the asset position.

The offence under Article 327 does not require the specific aim of harming creditors that characterises the recording or recognition of non-existent liabilities within fraudulent bankruptcy.

The relationship with fraudulent bankruptcy

The distinction from fraudulent bankruptcy is expressly laid down by law: Article 327 operates outside the cases covered by Article 322. Article 322 attaches greater criminal relevance to the recording or recognition of non-existent liabilities where the conduct is carried out in order to harm creditors.

The difference cannot therefore be reduced to the mere non-existence of the liability: the actual structure of the conduct and, above all, the subjective element supporting it must be verified. Where the elements of fraudulent bankruptcy are present, the more serious offence applies; otherwise, the declaration of a non-existent creditor in the list required by the proceedings may fall under Article 327.

The different conduct of the fictitious creditor

The declaration of a non-existent creditor by the entrepreneur must be kept distinct from the conduct of a person who, claiming to be a creditor, files a claim for admission to liabilities based on a fraudulently simulated credit.

The latter offence is separately governed by Article 338, which punishes anyone who, outside cases of complicity in bankruptcy, files, including through an intermediary, a claim for admission to the liabilities of the judicial liquidation based on a fraudulently simulated credit.

The two offences therefore differ in perpetrator, conduct and the stage of the proceedings at which the false credit is asserted.

Penalties

For the intentional form, Article 327 provides for imprisonment from six months to one year and six months. Where the act is committed through negligence, the penalty is imprisonment of up to one year.

The significant difference from the sentencing framework for fraudulent bankruptcy confirms the need for rigorous qualification of the conduct and of the subjective element.

Legal Aid's defence strategy

In proceedings concerning the declaration of non-existent creditors and the other breaches under Article 327, the defence first requires a documentary reconstruction of the asset situation represented within the judicial liquidation. The activity focuses in particular on:

• the actual existence and extent of the obligation indicated in the list of creditors
• the distinction between a non-existent credit, a disputed credit and one of uncertain amount
• the reconstruction of contractual, accounting and banking documentation
• verification of ownership and availability of any assets not indicated
• establishing the knowledge held by the entrepreneur at the time of the declaration
• distinguishing intentional conduct, negligent behaviour and error without criminal relevance
• the correct qualification of the act as opposed to fraudulent bankruptcy
• the distinction from a claim for admission to liabilities based on a fraudulently simulated credit

The defence must prevent a dispute over the existence or amount of a credit from being automatically turned into a criminal charge of non-existence. Likewise, where assets were not indicated, it must be verified whether the omission actually amounts to criminally relevant conduct or stems from uncertainty as to ownership, documentary error or a different reconstruction of the asset situation.

Related practice areas

• Fraudulent bankruptcy
• Preferential bankruptcy
• Simple bankruptcy
• Improper bankruptcy
• Abusive resort to credit
• False certifications and reports
• Corporate crimes

Frequently asked questions

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