In a judgment of 9 January 2018, the Supreme Court clarified the conditions for criminal liability resulting from the late filing for bankruptcy set forth in Article 489bis, 4th indent of the Criminal Code (Strafwetboek / Code pénal). 

This provision punishes anyone who, with a view to delaying the declaration of bankruptcy, failed to file for bankruptcy in a timely fashion in accordance with the Bankruptcy Law (Faillissementswet / Loi sur les faillites).  In that regard, Article 9 of the Bankruptcy law provides that a filing for bankruptcy should be made within one month from the cessation of payments by the bankrupt company.

In the case at hand, the Supreme Court upheld the judgment of the Court of Appeal of Brussels which had found a shadow director (i.e., a person who is exercising the function of director without having been formally appointed as such) of a company that was later declared bankrupt to be liable for not complying with this provision.  In particular, the Supreme Court held that it suffices to establish that the shadow director of the company did not file for bankruptcy despite the fact that the debts of the company kept on accumulating without any reasonable prospect of improvement in order to prove specific criminal intent to delay the bankruptcy.  In doing so, the Supreme Court rejected the argument put forward by the defendants that it had equated the requirement for criminal intent with a mere violation of the fiduciary duties of the directors.

The Supreme Court further confirmed that the Court of Appeal could validly dismiss the argument put forward by the shadow director that, since he was not an actual director, he was not entitled under the Bankruptcy Law to file for bankruptcy and, as a result, could not be held liable for not doing so.  The Supreme Court held that the mere fact that a shadow director does not have the legal capacity to file for bankruptcy in accordance with the relevant provisions of the Bankruptcy Law, does not rule out his or her criminal liability for late filing.  It is therefore important that, to the extent there is a risk that a person could be regarded as a shadow director of a company in financial difficulties, such a person takes, and documents, all necessary actions to ensure that a filing for bankruptcy is made in a timely fashion.

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