Tougher Criminal Liability For Bankruptcy-related Crimes

• Published date: 26 July 2021
• Subject Matter: Criminal Law, Insolvency/Bankruptcy/Re-structuring, Insolvency/Bankruptcy, Crime
• Law Firm: Dentons
• Author: Mr Timothy Stubbs, Roman Zaitsev and Maria Mikheyenkova

Federal Law No. 241-FZ of July 1, 2021 has introduced a number of changes to criminal prosecution under Articles 195 ("Unlawful Actions in Bankruptcy") and 196 ("Deliberate Bankruptcy") of Russia's Criminal Code. Only one or two dozen people a year are currently prosecuted under these articles.

On the one hand, the changes are intended to harshen punishment and expand practice in application of these articles. To this aim, a number of qualifying elements with harsher types and amounts of punishment have been devised. Harsher penalties have been adopted for cases where a debtor's controlling person or director have committed unlawful actions in a bankruptcy and/or for deliberate bankruptcy.

Article 196 of the Criminal Code has also been reworded apply to a broaden group of actors. Now, not only the company's director, or participant can be prosecuted for actions or failure to act that knowingly resulted in the legal entity's being unable to fully satisfy claims of creditors or competent authorities, but any other person can also potentially be prosecuted.

At the same time, a special case of...