Punishable insolvencies are a group of economic crimes regulated in article 259 and the following of the Penal Code.
One of the criminal conducts considered as punishable insolvency, regulated in article 259 and punishable by imprisonment for a term of one to four years and a fine of eight to twenty-four months, is being in a situation of actual or imminent insolvency and committing any of the following acts:
Engaging in any other active or omissive conduct which constitutes a serious breach of the duty of care in the management of financial affairs and which is attributable to a diminution of the debtor’s assets or by means of which the debtor’s actual financial position or business activity is concealed.
In addition to all this, the same article also punishes those who bring about their own insolvency. It is a crime of which one has to be very conscious, because it is possible to commit the crime through recklessness.
When the punishable insolvency conduct causes or may cause financial damage to a generality of persons or may place them in a serious financial situation, causes financial damage exceeding 600,000 euros or when at least half of the frustrated credit has the Social Security or the Public Treasury as a creditor, the penalties of two to six years and a fine of eight to twenty-four months shall be applied, according to the article 259bis of the Penal Code.
Article 260 targets punishable insolvency that consists of favouring a creditor by making an act of disposal of assets or creating obligations in order to pay a claim that is not due or to provide a guarantee to which the creditor is not entitled, when this is a transaction that has no economic or business justification.
Finally, it is also necessary to be aware that legal entities can commit the crime of punishable insolvency. Article 261bis punishes them with a penalty of six months to five years.