Major inadequacy as a cause of guilty qualification

In this article we are going to focus on one of the precepts that the law classifies as special cases. That is to say, in one of the causes of guilty qualification that does not admit proof to the contrary. The serious inaccuracy in any of the documents that accompany the request for insolvency proceedings.

Documents to be submitted with the bankruptcy petition

The documents that the debtor must submit with the bankruptcy petition are:

• An expressive report of the economic and legal history of the debtor, with an indication of partners, administrators, directors, etc. This report will include the activity, establishments, offices and exploitations of which the debtor is the owner. Likewise, it must contain the causes of the state of insolvency of the debtor.
• Inventory of assets and rights that make up the debtor’s assets.
• List of creditors, with expression of identity, domicile, amount and maturity of the debt.
• The workforce.
• The CCAA of the last three fiscal years.
• Memory with the significant changes operated in the patrimony, with posteriority to the last CCAA deposited.
• Report with the operations carried out after the last annual accounts filed.

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Non-compliance with the duty to file for insolvency proceedings

The debtor must file for insolvency proceedings within two months from the time he becomes aware or should have become aware of his insolvency.

Serious inaccuracy in the documents accompanying the application for insolvency proceedings.

Secondly, we proceed to define what the jurisprudence understands by serious inaccuracy.

The Supreme Court considers that a serious inaccuracy means the lack of adaptation to reality of the information contained in an authentic and valid document.

The inaccuracy may be committed intentionally, as well as by breach of due diligence. In no case will it be admissible to excuse the debtor for having delegated in a third party its preparation or provision.

How does the guilty qualification operate when a serious inaccuracy is found?

Serious inaccuracy is a cause of culpability, if it has not already been subject to assessment in another precept of culpability. This is an issue that may arise in different situations, for example, when there is an accounting irregularity. The accounting irregularity inevitably leads to an inaccuracy in the AC (Insolvency Administrator), as a document accompanying the request for insolvency proceedings. However, the non bis in idem, prevents the same fact from integrating two causes of guilt. Therefore, if the inaccuracy in the ACs were considered as an accounting irregularity, it would not be possible to also charge inaccuracy. The same fact cannot integrate two causes of culpability in bankruptcy.

In this sense, the judgment to STS of November 3, 2016, states:

“One and the same fact, the failure to provide the annual accounts or certain accounting documents, cannot integrate these two causes of culpability of the bankruptcy, one provided for in 164.2.1 of the Bankruptcy Law (substantial breach of the obligation to keep accounts, keeping double accounts or having committed an irregularity relevant to the understanding of its asset or financial situation in the accounts kept), and the other provided for in art. 164.2.2.2 .° (serious inaccuracy in any of the documents attached to the application for the declaration of bankruptcy or submitted during the processing of the procedure), when the disvalue of the conduct is the same.”

Likewise, for the inaccuracy to operate as a cause of guilty qualification, it has to have informative transcendence. In this sense, the aforementioned sentence states:

“It is also necessary that it has a relevant informative transcendence for the insolvency proceeding, specifically for some of its operations on the active or passive mass, for the qualification or for the approval of the agreement.”

Finally, as we noted at the beginning, in case of inaccuracy, the judge does not need to make an additional judgment. He does not need to determine whether the commission of the inaccuracy constitutes a conduct deserving of reproach. The legal provision of serious inaccuracy is a conduct that, in itself, deserves the reproach of the qualification. Thus the SC establishes:

“The insolvency judge does not need to make an added judgment, aimed at determining whether the commission of such inaccuracy in the presentation of those documents constitutes conduct deserving of reproach by way of gross negligence or fraud in the presentation of such documents. The legal provision contained in 164.2.2º of the Insolvency Law, by establishing that, in any case, the insolvency proceeding will be classified as guilty when the debtor has committed a serious inaccuracy in such documentation, has already made the assessment of such conduct as deserving of such reproach.”

Conclusions

The special assumptions of guilty qualification, are taxative causes of guilt. They do not require an additional trial by the judges. If they are committed, the insolvency proceeding will automatically be classified as guilty. This is the case with the serious inaccuracy in the documents provided to the process. Inaccuracy that supposes a lack of adaptation to reality. In this sense, it must be taken into account that the inaccuracy is committed by the debtor. Regardless of whether the documents were prepared by a third party.

If this article has been of interest, we also suggest you to read the following article published on our website:

Who is eligible to apply for a Bankruptcy Procedure?

When it is mandatory to apply for a declaration of insolvency?

The 7 keys to file for insolvency proceedings.

The Sale of a Production Unit in a Bankruptcy Procedure.