Natural and Malignant Bankruptcy and the Legal Outcome of it under Legal Acts in 1918-1940 in Lithuania
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Abstract
The research of insolvency history is actual even today, because lots of bankruptcy cases has obvious indications of deliberate bankruptcy, but case law determines that it is too difficult to rank bancrot as a criminal. Studies of criminal bankruptcy law beside historical point has the point of evaluating legal norms and their practical application in the field of legal relations. That is because without knowing the past, we can’t evaluate the present and to create the future. The purpose of this work is to determine the grounds of the fraudulent (criminal) bankruptcy in 1918-1940 and to compare with the legal regulation of fraudulent bankruptcy today.
In 1918-1940 there were four different legal systems in the territory of Lithuania and every of them had its own special legal regulation, based on civil legal acts of Russia (in the main part of Lithuania), France (over river Nemunas, in the left side), or Germany (in Klaipeda land). Legal regulation of bankruptcy usually was part of Commercial rules or commercial process, except Klaipeda land, which had separate acts called Konkursrecht and Konkursordnung. Now we use term of “Fraudulent bankruptcy” that means deliberate bringing of the enterprise to bankruptcy. In 1918-1940 the term “bankruptcy” meant only criminal bankruptcy, which usually contained the element of deliberation and bore criminal liability.
In all regions deliberation was when debtor improperly kept accounting books, when misstated about his debts, when tried to hide his property or being insolvent – to sell his property to the exclusive creditor while violating the rights or other creditors, etc. Persons also bared criminal liability for “ordinary bankruptcy”, but while it was not deliberate – the sentences were not related to imprisonment. The subjects of such liability were persons responsible for enterprise insolvency: usually the heads of enterprise, chiefs of administration or owners.
The case law in 1936 had excellent example of criminal bankruptcy – the case of Lithuanian Trade and Industry bank, where heads of bank were sentenced for bad credits.
The insolvency procedures without criminal aspect were indicated as competition process and it is not the subject of this research.
The historical evaluation of criminal bankruptcy can help us to determine the rule of law concerning fraudulent bankruptcy and to find reasons of unsuccessful application of law today.
In 1918-1940 there were four different legal systems in the territory of Lithuania and every of them had its own special legal regulation, based on civil legal acts of Russia (in the main part of Lithuania), France (over river Nemunas, in the left side), or Germany (in Klaipeda land). Legal regulation of bankruptcy usually was part of Commercial rules or commercial process, except Klaipeda land, which had separate acts called Konkursrecht and Konkursordnung. Now we use term of “Fraudulent bankruptcy” that means deliberate bringing of the enterprise to bankruptcy. In 1918-1940 the term “bankruptcy” meant only criminal bankruptcy, which usually contained the element of deliberation and bore criminal liability.
In all regions deliberation was when debtor improperly kept accounting books, when misstated about his debts, when tried to hide his property or being insolvent – to sell his property to the exclusive creditor while violating the rights or other creditors, etc. Persons also bared criminal liability for “ordinary bankruptcy”, but while it was not deliberate – the sentences were not related to imprisonment. The subjects of such liability were persons responsible for enterprise insolvency: usually the heads of enterprise, chiefs of administration or owners.
The case law in 1936 had excellent example of criminal bankruptcy – the case of Lithuanian Trade and Industry bank, where heads of bank were sentenced for bad credits.
The insolvency procedures without criminal aspect were indicated as competition process and it is not the subject of this research.
The historical evaluation of criminal bankruptcy can help us to determine the rule of law concerning fraudulent bankruptcy and to find reasons of unsuccessful application of law today.
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Please see Copyright and Licence Agreement for further details.
