The OHADA Law has provided for two types of criminal bankruptcy; Simple and Fraudulent bankruptcy for particularly serious acts committed either by individual commercial operators or by shareholders in certain types of companies who are indefinitely and jointly and severally liable for their company’s debts. The management may be subject to criminal bankruptcy even if they have also been made subject to the extension of administration or liquidation proceedings.
- Simple bankruptcy (banqueroute simple): Simple bankruptcy is incurred when the business is insolvent and when the person concerned has:
- Made undertakings which are too onerous in view of the financial situation and has not received sufficient consideration in exchange;
- In an attempt to delay a determination of insolvency, made purchases with a view to reselling the goods at less than market value or has used ruinous methods to obtain funds;
- Failed without any legitimate reason, to declare insolvency within 30 days etc.
2. Fraudulent bankruptcy (banqueroute frauduleuse): Fraudulent bankruptcy, for which the penalties are more severe, is incurred by individual commercial operators and by shareholders who are indefinitely and jointly and severally liable for the company’s debts, when the business is in a situation of insolvency and the person concerned has:
- Concealed the accounts;
- Embezzled or squandered some or all of the assets;
- Fraudulently acknowledged non-existent debts;
- Exercised commercial profession while prohibited from doing so etc.
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