Fraudulent Bankruptcy Through Fraudulent Transactions: Cassation Upholds the Conviction

The short answer

With judgment No. 4777 (hearing 20 November 2025, filed 5 February 2026) the Fifth Criminal Section of the Court of Cassation dismissed the appeal and upheld the conviction for improper fraudulent bankruptcy through fraudulent transactions (bancarotta fraudolenta impropria da operazioni dolose). The defence argument, centred on the failure to prove that the defendant had a concrete ability to meet the obligations that remained unpaid, was held to be unfounded.

The regulatory framework

For insolvency proceedings opened on petitions filed from 15 July 2022, Article 329, paragraph 2, letter b), of the Italian Code of Business Crisis and Insolvency (Legislative Decree No. 14 of 12 January 2019, CCII) applies; for earlier petitions and for proceedings already pending on that date, Article 223, paragraph 2, No. 2, of the former Bankruptcy Law (Royal Decree No. 267/1942) remains applicable, pursuant to Article 390 CCII, with an identical structure on the point examined here. The provision describes two distinct scenarios: causing the company’s insolvency through intent, or causing it as an effect of fraudulent transactions, where the intent covers the wrongful transaction and the insolvency is attributed on the basis of its concrete foreseeability.

The principle relied upon

The decision follows a well-established line of case law on the mental element of the offence: the offender must have acted with awareness and will of the complex action causing financial harm, in breach of the duties attached to the office, and the insolvency must have been concretely foreseeable as an effect of that wrongful conduct. This is a principle already established by Section 5, judgment No. 24692 of 17 June 2025, and referred to in the decision under discussion, against which the ground of appeal was measured and found unfounded.

Why it matters for those who manage a company

The defence may rely on proof of the concrete ability to pay — that is, on the actual availability of resources that would have made payment feasible. However, in the case decided that argument was found unfounded: it is not a shortcut, it must be supported by precise accounting evidence and, where the reasoning on the merits is adequate, it is not open to review before the Court of Cassation.

In practice

• The burden of proving the intent behind the transaction and the concrete foreseeability of the insolvency lies with the prosecution: no reversal is allowed in criminal proceedings.
• Directors are nonetheless well advised to keep documentation (cash flows, bank records, board resolutions) capable of supporting, if needed, a defence claim of inability to pay.
• An isolated omission linked to a temporary liquidity strain is different from a systematic, prolonged failure to pay.
• To identify the applicable rule, look at the date of the petition that opened the insolvency proceeding, not the date of the conduct.

Frequently asked questions

Is mere negligence by the director enough? Simple negligence is not sufficient: the transaction must be knowingly contrary to the director’s duties. The insolvency itself, however, need not be intended, because it is attributed according to its concrete foreseeability, a criterion that retains a fault-based component; in this area there is no rule that shields deliberately harmful management decisions.

Does a liquidity crisis rule out the offence? Not automatically: what matters is whether, and to what extent, resources were available and how they were allocated, an assessment of fact that the Court of Cassation does not revisit where the reasoning is adequate.

Summary note by Studio Legale Petrali, based on specialised legal sources. This text does not reproduce third-party contributions and does not constitute legal advice.