Bankruptcy Law

Accounting that is manifestly incomplete or irregular in the light of legal provisions may also be punished as bankruptcy . This particular offense includes failure to comply with the obligation to record transactions affecting the company's assets, as set out in Article L. 123-12 of the Commercial Code , such as advances received from a bank, failure to include an aircraft in the company's assets …

Clearly incomplete or irregular bookkeeping

Accounting that is manifestly incomplete or irregular in the light of legal provisions may also be punished as bankruptcy . This particular offense includes failure to comply with the obligation to record transactions affecting the company's assets, as set out in Article L. 123-12 of the Commercial Code , such as advances received from a bank, failure to include an aircraft in the company's assets, failure to draw up the mandatory accounting records, and failure to provide for risks and charges arising from pending legal proceedings . The offense of bankruptcy may be constituted even before the close of the financial year, when obvious shortcomings or irregularities in the keeping of accounting records are noted before that date . Furthermore, in the case of manifest irregularities, such as a lack of consistency between accounting transactions and their supporting documents, or a lack of consistency from one year to the next, the manager may be charged with the offence of bankruptcy, without the court having to provide details of the specific accounting obligations disregarded .

The offense is also constituted when the manager fails to submit the accounts requested by the legal representative .

A finding of bankruptcy fraud is justified if the incompleteness or irregularity of the accounts reflects a deliberate concealment on the part of the manager, the effect of which was to give the debtor company a false image , to conceal its difficulties , or to delay the opening of receivership or liquidation proceedings . However, in order to establish the intentional element of the offense of bankruptcy through the keeping of manifestly incomplete or irregular accounts, it is only necessary to prove that the perpetrator was aware that he or she was evading his or her legal accounting obligations, and not that the accused had the intention to avoid or delay the determination of the cessation of payments, or to affect the consistency of the available assets in such a way as to make it impossible for him or her to meet the liabilities due . The considerable discrepancy between the losses recorded in the accounts and the company's actual losses reflects a deliberate concealment or should at least have aroused the manager's suspicions, and justifies his conviction for bankruptcy through manifestly irregular accounting .

Finally, a manager convicted of the offence of bankruptcy through irregular bookkeeping cannot also be charged with the offense of false accounting for the same facts .

Cass. crim., 31 October 2007, LawLex202300008722JBJ (LJ).

Cass. crim., 12 December 2007, LawLex202100001989JBJ (LJ).

Cass. crim., 9 September 2020, LawLex202200009116JBJ (LJ).

Cass. crim., 9 February 2022, LawLex202200002255JBJ (LJ).

Cass. crim., 22 June 2022, LawLex202200008846JBJ (LJ).

Cass. crim., 3 December 2014, LawLex202100002041JBJ (LJ).

Cass. crim., 28 February 2018, LawLex202100000941JBJ (LJ, considering that Commits the offence of bankruptcy by keeping incomplete or irregular accounts the manager whose accounting concealments, which consisted in including in sales commissions not definitively earned when they should only have appeared in the accounts as provisions, had the object and effect of giving the company a false image.

Cass. crim., 4 November 2004, LawLex202200009129JBJ (LJ), Dr. sociétés 2005, n° 100, obs. SALOMON, holding that when a company's accounting is seriously deficient, the experienced manager who cannot ignore the consequences of this situation must be charged with the offence of bankruptcy by keeping manifestly incomplete and irregular accounts, when this failure has made it possible to conceal a seriously loss-making situation and the scale of the deductions made for the benefit of “upstream structures”, which have had a significant impact on the company's cash flow.

Cass. crim., 8 March 2006, LawLex202100002039JBJ (RJ), holding that a company manager is guilty of bankruptcy through manifestly irregular or incomplete bookkeeping, when services have been invoiced in advance, justified by fictitious credit balances, in order to artificially increase sales and defer the court-ordered liquidation, and a hidden accounting system has been found with different entries.

Cass. com., 25 November 2020, LawLex202100005849JBJ (RJ).

Bankruptcy Law

1033. Clearly incomplete or irregular bookkeeping

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1033. Clearly incomplete or irregular bookkeeping

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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