Fraudulent bankruptcy and directors' liability: analysis of judgment no. 7723 of 2024

Judgment no. 7723 of February 22, 2024, by the Court of Cassation provides important clarifications on fraudulent bankruptcy and directors' liability. In particular, the case involved A.A., mayor of a municipality and legal representative of a bankrupt company, and B.B., a member of the board of statutory auditors, both accused of fraudulent bankruptcy.

Context of the judgment

The Court of Appeal of Salerno had acquitted A.A. of the charge of fraudulent bankruptcy, highlighting that no causal link had emerged between his conduct and the company's collapse, while B.B. had been convicted. The Deputy Prosecutor then appealed the judgment, emphasizing A.A.'s responsibility in contributing to the collapse through irregular accounting operations.

Case law has established that to establish the criminal liability of an outsider, a specific causal contribution to the criminal conduct must be demonstrated.

Court's reasoning

The Court clarified that to establish A.A.'s liability, it was essential to demonstrate that his actions were not compatible with the exercise of political power, but rather indicated an active contribution to the collapse. The judgment also stressed that the registration of a fictitious debt in the balance sheet could not have occurred without his consent, thus constituting direct liability.

Responsibilities of the board of statutory auditors

Regarding B.B., the Court upheld the conviction, highlighting that the board of statutory auditors has the obligation to supervise the actions of the directors. His conduct was deemed insufficient to counteract accounting irregularities, which further aggravated the company's collapse. It is important to note that the liability of the auditors is not limited to mere oversight but includes a duty to act in case of irregularities.

• Complicity in the crime of bankruptcy.
• Role of the mayor and criminal liability.
• Supervisory duty of the board of statutory auditors.

Conclusions

Judgment no. 7723/2024 by the Court of Cassation clearly outlines the boundaries of liability in cases of fraudulent bankruptcy, emphasizing the need to demonstrate a direct causal link between the defendant's conduct and the collapse. Furthermore, the active role of the members of the board of statutory auditors in supervising the company's management is crucial to avoid criminal liability. This case underscores the importance of proper management of public companies and the need for rigorous oversight by the competent bodies.