Cass. crim, Nov. 25, 2020, n°19-85.205, F-P+B+I
In a landmark ruling issued on November 25, 2020, the Court of Cassation clarified the offense of bankruptcy.
In this case, directors of a real estate company (SCI) that had been subject to judicial reorganization proceedings were prosecuted for bankruptcy by use of ruinous means, irregular accounting practices and lack of accounting, after the provisional administrator had sent the public prosecutor's office an accounting expert report revealing these irregularities.
The defendants had been convicted in the first instance but acquitted by the Court of Appeal, which, like the criminal court which had put forward the date of cessation of payments to 2012, had aligned itself with the date retained by the High Court, namely 2013.
The Court of Appeal did not deny the irregularity of the accounting in 2011, then the absence of accounting from 2012 to 2013, it had, however, noted several factual circumstances preventing it from considering that these events had taken place "with the aim pursued by the defendants of delaying the finding of insolvency or of affecting the assets of the SCI in conditions which would make it impossible for it to meet its liabilities" .
Furthermore, after analyzing the defendants' personalities, as well as the company's history, its compliance with the recovery plan and the subsequent continuation of its activity, the Court of Appeal had excluded "the theory that they intended to artificially maintain the company's activity before the date of cessation of payments as set by the High Court".
The directors then decided to appeal to the Court of Cassation. Could they be prosecuted even though the alleged acts had been committed before the date of cessation of payments? The acquittal was overturned.
The Court of Cassation held that "while the cessation of payments, established by the judgment opening a reorganization or liquidation procedure, is a necessary precondition for bringing charges of bankruptcy by use of ruinous means, keeping manifestly irregular accounts or absence of accounts, its date has no bearing on the characterization of these offenses, which can be retained indifferently for acts committed before or after the cessation of payments ."
It should be noted that, according to this ruling, the Court of Cassation demonstrates great severity when it notes, with reference to Articles L.654-2 4° and 5° of the Commercial Code and Article 121-3 of the Penal Code, that " the characterization of the intentional element of the offenses of bankruptcy by absence of accounting or keeping manifestly irregular accounting requires only the awareness of its perpetrator of evading his legal accounting obligations (...) does not require proof that the defendant had the intention either to avoid or delay the finding of the state of cessation of payments , or to affect the composition of the available assets in conditions likely to place the person concerned in the impossibility of meeting the liabilities due."
