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    Criminal Cases and Insolvency

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    1. Filing for insolvency does not prevent criminal prosecution for related offenses such as fraudulent insolvency, where a debtor transfers property out of reach of creditors. 2. A petition for insolvency only suspends civil proceedings against the debtor, not any pending criminal cases such as bouncing checks or estafa. 3. While an insolvency filing discharges honest debtors from civil debts, it does not invalidate criminal judgments or fines imposed by criminal prosecution.

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    Criminal Cases and Insolvency

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    78 views2 pages
    1. Filing for insolvency does not prevent criminal prosecution for related offenses such as fraudulent insolvency, where a debtor transfers property out of reach of creditors. 2. A petition for insolvency only suspends civil proceedings against the debtor, not any pending criminal cases such as bouncing checks or estafa. 3. While an insolvency filing discharges honest debtors from civil debts, it does not invalidate criminal judgments or fines imposed by criminal prosecution.

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    Criminal Cases and Insolvency discussed

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    1. Filing for insolvency does not prevent criminal prosecution for related offenses such as fraudulent insolvency, where a debtor transfers property out of reach of creditors. 2. A petition for insolvency only suspends civil proceedings against the debtor, not any pending criminal cases such as bouncing checks or estafa. 3. While an insolvency filing discharges honest debtors from civil debts, it does not invalidate criminal judgments or fines imposed by criminal prosecution.

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    78 views2 pages

    Criminal Cases and Insolvency

    Uploaded by

    haze_toledo5077
    1. Filing for insolvency does not prevent criminal prosecution for related offenses such as fraudulent insolvency, where a debtor transfers property out of reach of creditors. 2. A petition for insolvency only suspends civil proceedings against the debtor, not any pending criminal cases such as bouncing checks or estafa. 3. While an insolvency filing discharges honest debtors from civil debts, it does not invalidate criminal judgments or fines imposed by criminal prosecution.

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    Criminal Cases and Insolvency

    Published by Atty. Fred June 25th, 2007 in Banking, Corporate and Investments and Criminal Law.
    0 Comments

    I often come across debtors dropping the hint of filing, or actually filing, a case for
    insolvency or bankruptcy just to bring home the (alleged) point that they have nothing
    more to cough out. It is true that once a petition for insolvency is granted, the debtorinsolvent is discharged from all his existing debts. The decision to file for insolvency,
    however, should not be taken lightly. Here are a few reasons why:
    The alleged insolvent debtor may be subject to criminal prosecution. There are a
    number of criminal cases that an alleged insolvent debtor may face. For instance, the
    debtor may be charged with fraudulent insolvency, a criminal offense, if it is shown that
    he transferred his property to another place beyond the reach of the creditors. Article 314
    of the Revised Penal Code (RPC) reads:
    Fraudulent insolvency.- Any person who shall abscond with his property to the prejudice
    of his creditors, shall suffer the penalty of prision mayor, if he be a merchant and the
    penalty of prision correccional in its maximum period to prision mayor in its medium
    period, if he be not a merchant.
    Technically, Fraudulent insolvency does not mean that the offender is insolvent. A
    debtor who has transferred his property to another place beyond the reach of the creditors
    has been found to be guilty of Fraudulent Insolvency.
    2. A petition for insolvency does not extinguish a criminal case. Lets say youre
    facing a criminal case, perhaps BP 22 (Bouncing Checks) or estafa. Will the petition for
    insolvency adversely affect the pending criminal case?
    Insolvency, with respect to individuals, is governed by Act No. 1956 (1909), as amended.
    This law, which is known as the Insolvency Law, provides that all actions against the
    petitioner-insolvent is suspended. Section 18 of the Insolvency Law, governing voluntary
    petitions, reads:
    Order of court declaring petitioner insolvent; Publication notice. Upon receiving and
    filing said petition, schedule, and inventory, the court, or the judge thereof in vacation,
    shall make an order declaring the petitioner insolvent . . . Upon the granting of said order
    all civil proceedings pending against said insolvent shall be stayed.
    There is nothing in the Insolvency Law which provides for the extinction of any criminal
    action against the petitioner. The Philippine Insolvency Law, insofar as it relates to
    voluntary insolvency, is essentially a bankruptcy law because it discharges the honest
    debtor. The legislative history of the part which deals with voluntary and involuntary
    insolvency clearly shows that the legislature intended to establish the essential features of
    the American system. We may refer to U.S. Supreme Court decisions for guidance on this
    matter.
    Under U.S. Bankruptcy Law, a discharge in bankruptcy releases the bankrupt person from
    the personal or legal obligation to pay the claims and judgments released thereby and bars
    the remedy therefore. However, it is not res judicata in a criminal case, for the parties are
    not identical. In fact, a fine imposed in a criminal prosecution is not a debt dischargeable
    in bankruptcy.
    The foregoing discussion applies in particular to a natural person. A juridical person
    (example, a corporation) may also file a petition for insolvency, although there are other
    available options, such as suspension of payments and corporate rehabilitation.

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