Bankruptcy (§ 283 of the German Criminal Code) – Criminal risk in a corporate crisis
The accusation of bankruptcy often hits entrepreneurs, managing directors, board members, and de facto decision-makers during already stressful economic crises. In cases of liquidity shortages, over-indebtedness, or impending insolvency, business decisions can quickly come under the scrutiny of law enforcement. What was intended from a business perspective as a restructuring or liquidity-securing measure can be considered under criminal law as an unlawful transfer of assets or a breach of commercial obligations.
Bankruptcy offenses are part of insolvency criminal law and have complex connections to commercial, corporate, and insolvency law. A criminal assessment regularly requires a detailed analysis of the financial situation, the accounting records, and the specific business decisions.
For defendants, the potential consequences extend beyond fines or imprisonment. They also face possible confiscation of assets, professional or corporate law repercussions, liability claims, and reputational risks. Therefore, an early and strategically focused defense is crucial.
The lawyers at Galen Rechtsanwälte advise and defend clients nationwide at all stages of legal proceedings. With our many years of experience in white-collar crime and insolvency law, we analyze the charges and develop a defense strategy tailored to your personal and financial circumstances.
When does one become liable to prosecution for bankruptcy under Section 283 of the German Criminal Code?
Economic crisis as a starting point
Only the debtor himself, or in the case of companies, his representatives acting on his behalf, can be the perpetrator of bankruptcy. Criminal liability under Section 283 Paragraph 1 of the German Criminal Code (StGB) initially requires the existence of an economic crisis on the part of the debtor. This means over-indebtedness or actual or imminent insolvency. The decisive factor is always the economic situation at the time of the offending action.
Furthermore, criminal liability under Section 283 Paragraph 2 of the German Criminal Code (StGB) may also be considered if a bankruptcy act causes such an economic crisis.
In addition, Section 283 Paragraph 6 of the German Criminal Code requires, as an objective condition of criminal liability, that the perpetrator has ceased payments, insolvency proceedings have been opened against his assets, or the application for the opening of insolvency proceedings has been rejected due to lack of assets.
Bankruptcy under Section 283 of the German Criminal Code (StGB) encompasses a wide range of possible offenses. These include, in particular:
- Disposing of or concealing assets that would belong to the insolvency estate in the event of insolvency proceedings being opened,
- Engaging in grossly uneconomical loss-making or speculative transactions,
- Disposal of assets below value in a manner contrary to the requirements of sound business practice,
- Misrepresentation of the rights of others or recognition of non-existent rights, as well as
- certain violations of commercial accounting, balance sheet or retention obligations
In principle, these elements of the offense are interpreted in the same way as in civil and insolvency law. Therefore, advising on and defending against accusations of bankruptcy often requires in-depth knowledge of the relevant case law.
Bankruptcy generally requires intent. The accused must, among other things, have recognized the economic crisis or at least considered it possible and accepted it knowingly. The law also recognizes negligent forms of commission. In these cases, it depends, among other things, on whether the due care required in the circumstances was disregarded.
Typical case scenarios in practice
The most frequent accusations concern the concealment of assets.
Typical scenarios include: the relocation of business assets or inventory, withdrawals from company funds, or the transfer of assets to close relatives. Furthermore, allegations of bankruptcy often involve the procurement of goods on credit, the dumping of company merchandise, or sham transactions. Particularly relevant in practice are situations where restructuring efforts are subsequently deemed grossly uneconomical. The distinction between permissible entrepreneurial risk and criminal bankruptcy is complex and requires a nuanced examination under both commercial and criminal law.
How is a bankruptcy discovered?
In practice, investigations are initiated, for example, as a result of notifications from insolvency courts to law enforcement authorities. This is because insolvency courts are obligated to forward any indications of potential insolvency-related offenses to the public prosecutor's office.
Other common triggers for investigations are criminal complaints filed by insolvency administrators and creditors. Former employees or business partners can also initiate investigations by filing criminal complaints.
The public prosecutor's office conducts the investigation and regularly utilizes specialized economic crime departments. Typical investigative measures include searches of business and private premises, seizure of documents and data storage devices, and asset freezes. The public prosecutor's office also frequently consults business experts.
Especially with digital accounting systems and electronic communication, enormous amounts of data can be analyzed. Early legal counsel helps to effectively protect your rights and to conduct structured communication with the investigating authorities.
What penalties are imposed for bankruptcy?
For intentional bankruptcy under Section 283, paragraphs 1 and 2 of the German Criminal Code (StGB), the statutory penalty ranges from a fine to imprisonment of up to five years. In particularly serious cases (Section 283a StGB), the penalty ranges from six months to ten years imprisonment. A particularly serious case is generally considered to exist if the perpetrator acts out of greed or knowingly endangers many people by placing them at risk of losing their entrusted assets or causing them financial hardship.
For negligent commission of the offense (§ 283 para. 4 and 5 of the German Criminal Code), a fine or imprisonment of up to two years is threatened.
In addition to the main sentence, further collateral consequences may apply. These collateral consequences can include, in particular:
- professional and trade law measures
- the possibility of a professional ban
- corporate law consequences such as a ban on acting as managing director or board member
Furthermore, the confiscation of assets may be considered if advantages were gained through the act.
This is how we support you in dealing with allegations of bankruptcy.
The lawyers at Galen Rechtsanwälte advise and defend clients nationwide in proceedings related to white-collar crime and insolvency law. We have many years of experience in complex cases and in supporting companies and individuals in crisis situations.
Our work focuses on an early, structured, and discreet approach. We clarify the initial situation, request access to the case file, and analyze the public prosecutor's investigative approaches and the legal basis of the alleged offense.
Professional criminal defense in insolvency criminal law requires a close integration of criminal law analysis, insolvency and civil law understanding, and business management evaluation.
We advise you on matters including the exercise of your right to remain silent, accompany you during searches and – if necessary – collaborate with civil lawyers, tax advisors, auditors and restructuring experts.
Have you received a summons or a summons for a hearing, or is your company in crisis? Feel free to contact us for a confidential consultation!
Bankruptcy refers to criminal acts related to an economic crisis, particularly in cases of over-indebtedness or insolvency. These include, for example, asset transfers, grossly uneconomical business transactions, or significant violations of accounting obligations.
No. Insolvency itself is not a criminal offense, but economic crises often present criminal risks. Conduct only becomes criminally relevant when it involves breaches of duty deemed punishable by law. Mere economic difficulties are not sufficient.
Insolvency exists when due payment obligations can no longer be met. A mere payment delay is insufficient. The assessment is based on a liquidity statement and regularly requires a business analysis.
Over-indebtedness exists when assets do not cover existing liabilities and there is no positive going concern forecast. The assessment is complex and depends on valuation issues as well as future projections.
Yes. The law also provides for negligent forms of commission. In these cases, it must be examined, among other things, whether the required care was disregarded.
Pre-trial detention requires not only a strong suspicion of a crime, but also grounds for detention, in particular a risk of flight or obstruction of justice, and the proportionality of the detention. Pre-trial detention can also be ordered in white-collar crime proceedings if these conditions are met. The circumstances of the specific individual case are decisive.
Insolvency administrators often forward indications of insolvency-related crimes to the public prosecutor's office. Their reports and findings can initiate investigations. At the same time, they can be important witnesses in the proceedings.
The standard limitation period is five years. The start of the period and any possible grounds for interruption must be carefully examined in each individual case.
Comprehensive restitution can be considered a mitigating factor in sentencing. However, it does not automatically lead to immunity from prosecution. Whether and to what extent restitution is taken into account depends on the specific circumstances.
As a suspect, you are generally not obligated to comply with a police summons. You should not make a statement without first consulting a lawyer. Early legal representation can be crucial for the further course of the proceedings.