Concealment or hiding of assets during insolvency (bankruptcy) proceedings is a serious economic crime aimed at deceiving creditors and avoiding payment of debts. In Georgia, this act is regulated by Article 205 of the Criminal Code (Concealment of property during insolvency proceedings). The crime manifests in the alienation, concealment, damage, or destruction of company property by a director or founder after the company has become insolvent or its bankruptcy is imminent. It is common for businesspeople to try to "save" remaining assets by transferring them to relatives or creating fictitious debts. This action not only leads to criminal liability but also voids the transactions made and jeopardizes personal property. The defense strategy must be based on proving that the disposal of property occurred for legitimate business purposes and not with the intent to harm creditors.
What does Concealment of Bankruptcy Assets Defense cover?
Lawyers experienced in insolvency law offer:
- Audit of transactions: Analyzing transactions made during the disputed period and substantiating their economic feasibility.
- Defense against criminal prosecution: Representing the client's interests in the Prosecutor's Office and presenting evidence that the act did not have a criminal nature.
- Negotiation with the Rehabilitation Manager: Cooperating with the insolvency manager to avoid the initiation of a criminal case in exchange for the voluntary return of assets.
- Separating civil liability: Arguing that the issue belongs to a civil legal dispute and not criminal law.
- Refuting fictitious obligations: Defending against accusations that the company artificially created liabilities to reduce assets.
Common Situations and Scenarios
Charges are often related to the following actions:
- Transferring property to relatives: Gifting real estate or cars to family members shortly before bankruptcy.
- Selling assets cheaply: Selling expensive equipment or inventory at prices significantly below market value to related companies.
- Destruction of accounting records: Hiding information about the location of property.
- Withdrawal of cash funds: Cashing out funds from accounts for undocumented expenses.
Georgian Legislation and Legal Framework
The main article is Article 205 of the Criminal Code. Also critically important is the Law "On Rehabilitation and Collective Satisfaction of Creditors." The law imposes a fiduciary duty on the director to care for the interests of creditors when the company is on the verge of insolvency. Violation of this duty and concealment of property is punishable by a fine or imprisonment. The defense must prove that the transactions were part of ordinary business risk.
Service Delivery Process
The lawyer studies the company's financial history for the last 2-3 years. If suspicious transactions are discovered, a strategy is developed to justify them. Often the best solution is to settle with creditors and return part of the assets in exchange for terminating criminal prosecution.
Why choose a specialist on Legal.ge?
Bankruptcy crimes require a lawyer who is well-versed in corporate law and criminal proceedings. Specialists represented on Legal.ge will help you manage complex financial crises and protect your freedom. Find a reliable partner on our platform.
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