The business went well for seven years. Then two major clients fell into arrears, the bank refused to extend the credit line, and you kept the business alive with personal money, hoping it would pass. You paid first the suppliers that production depended on, put off the state, sold a van to a cousin, lent the company money and paid yourself back when some receipts came in. After a year and a half, insolvency became unavoidable. And in the judicial administrator's report you read that some transactions “show indications that acts under the criminal law were committed”.
None of what you did felt fraudulent to you. The problem is that the line between business failure and bankruptcy does not run through your subjective intent, but through what you did with the assets, the records and the statutory time limit. The presumption of innocence remains the rule until a final judgment.
The first clarification, because it is missing from the public debate: a state of insolvency, the insufficiency of funds available to pay debts that are certain, liquid and due, is not unlawful. Commercial failure is a risk inherent in entrepreneurship, and insolvency proceedings are a legal mechanism for managing it, not a sanction.
The Criminal Code does not criminalise bankruptcy as such. It criminalises two different things: seriously delaying the opening of proceedings and defrauding creditors.
Article 240(1) penalises the failure to file, or the late filing, by the debtor who is a natural person, or by the legal representative of a debtor that is a legal person, of the application to open insolvency proceedings, within a period exceeding the statutory time limit by more than 6 months from the onset of the state of insolvency.
The penalty: imprisonment from 3 months to 1 year, or a fine. Criminal proceedings are set in motion on the prior complaint of the injured party.
The statutory time limit the text refers to is the one in Article 66(1) of Legea nr. 85/2014: a debtor in a state of insolvency must apply to the tribunal within 30 days at most of the onset of that state. The arithmetic of the offence is, therefore: 30 days plus another 6 months. Below that threshold there is no simple bankruptcy; there may, at most, be other forms of liability.
Two useful nuances. First: if, when the 30 days expire, the debtor is in good faith engaged in out-of-court negotiations to restructure the debt, the application must be filed within 5 days of the negotiations failing. Real, documented negotiations count. Second: since this is a prior complaint, withdrawing it removes criminal liability, and the time limit for filing it is 3 months from the date the injured party learned of the act.
Article 241 criminalises the act of a person who, to defraud creditors, commits one of the following. The penalty: imprisonment from 6 months to 5 years. Criminal proceedings are set in motion on the prior complaint of the injured party, usually the creditors who suffered the loss.
Falsifying, removing or destroying the debtor's records, or hiding part of its assets.
Presenting non-existent debts, or showing amounts not owed in the debtor's registers, in another document, or in the financial statements.
Disposing of part of the assets where the debtor is insolvent.
What links the three forms is the purpose: defrauding creditors. That is not a decorative phrase; it is the essential requirement of the mental element. A sale of an asset at market price, with the money paid into the company's account and used to pay debts, defrauds no one, even if it happens during insolvency. A sale at a fraction of the value, to a company owned by one's son, with payment “offset” against a supposed loan, is something else. The difference does not lie in the nature of the transaction, but in its effect on the creditors' pool and in its economic justification.
WARNING: The most common and most costly mistake, on the eve of insolvency, is “sheltering” assets. Transferring a piece of equipment, a trademark, a property or a client portfolio to a newly formed company controlled by the same people is exactly the conduct described by Article 241(a) and (c), and it opens, in parallel, an action to annul the fraudulent acts and to hold the person liable with their own assets. The transaction does not protect your estate: it exposes it, adding a criminal file to a civil debt. The same transfers can also be read, separately, as acts of money laundering, and the assets can be frozen through precautionary seizure (sechestru asigărător).
Legea nr. 85/2014 looks backward. Article 117 allows the judicial administrator or the liquidator to ask the insolvency judge to annul fraudulent acts entered into by the debtor to the detriment of creditors' rights, in the 2 years before proceedings opened.
Among those targeted are: transfers made free of charge in the preceding 2 years (except humanitarian sponsorships); transactions in which what the debtor gave plainly exceeds what it received, carried out in the preceding 6 months; and other categories of acts listed in the text, including payments and the granting of security with a preferential effect.
This interval is what legal writers call the “suspect period”. The term is misleading: not everything that happened then is suspect, and annulment requires its own conditions to be proved. But every act within this interval will be read by the judicial administrator through the lens of fraud. The annulment action is civil, not criminal, but the findings made in the course of it feed, in practice, into the criminal complaint.
The time limit for bringing it: 1 year from the expiry of the time limit for filing the report under Article 97, but no later than 16 months from the opening of proceedings.
Article 97 of Legea nr. 85/2014 requires the judicial administrator or the liquidator to file with the insolvency judge, within 40 days at most of their appointment (extendable by up to 40 more days in cases of high complexity), a report on the causes and circumstances that led to the state of insolvency, identifying the persons to whom it might be attributable. The report also states whether there is a real possibility of reorganisation.
In most files, this document is what moves the discussion from the commercial tribunal to the prosecutor's office. When the judicial administrator finds indications of criminal acts, they refer the matter to the criminal investigation bodies, in the same way that, on the tax side, an inspection can turn into a referral, a mechanism described in the analysis on the tax inspection that becomes a criminal file.
The practical consequence for the entrepreneur is that their position is decided before the report, not after: in how they hand over the documents, explain the transactions, and supply the economic context for the decisions being questioned. A report that identifies an “external cause of the insolvency”, the loss of a major client, a blocked payment, a regulatory change, has a different effect from one that finds missing records and unexplained transfers.
Article 169 of Legea nr. 85/2014 allows part or all of the debtor's liabilities to be borne by members of the management bodies, or by other persons who contributed to the state of insolvency, through acts listed exhaustively at points (a) to (h).
Among them: using company assets for personal benefit; continuing, for personal benefit, an activity that plainly led to a cessation of payments; keeping fictitious accounts, the disappearance of accounting records, or failing to keep accounts as required by law; misappropriating or hiding part of the assets; fictitiously increasing the liabilities; using ruinous means to raise funds in order to delay the cessation of payments; preferentially paying one creditor, in the month before payments ceased, to the detriment of the others; any other act committed with intent that contributed to the insolvency.
It is civil, financial liability, decided by the insolvency judge. It does not produce a criminal record, it does not produce imprisonment, but it does produce enforcement against personal assets.
The text expressly provides that applying it does not exclude the application of the criminal law to acts that constitute offences. The same material facts are read twice, at the same time.
A liability action being upheld is not the same as a conviction, and its dismissal does not guarantee the file will be closed. The two proceedings must be defended separately, with coordinated strategies, but statements made in the civil proceedings invariably end up in the criminal file.
The action becomes time-barred 3 years after the date on which the person who contributed to the insolvency was known, or should have been known, but not earlier than 2 years from the date of the decision opening proceedings. How the roles of management and the finance and accounting department are separated is dealt with in the analysis on the liability of the director and the accountant.
If the matter involves a criminal complaint or an open file, the related analyses are grouped under economic criminal law. For how the defence is built, see defence in insolvency offences.
An insolvency file rarely stops at bankruptcy. The neighbouring charges are as follows.
The appropriation, use or trafficking, by an official, of money or property they manage or administer. The difference from bankruptcy: embezzlement protects the company's assets, bankruptcy protects the creditors' interest. Unjustified cash withdrawals in the period before insolvency are the classic ground where the two overlap.
When non-payment is combined with hiding the taxable source or with fictitious records, the discussion moves to Article 9 of Legea nr. 241/2005. In many insolvencies, the state budget is the majority creditor, and ANAF is the creditor that most often files a criminal complaint.
Causing loss in the course of administering or preserving another person's property: 6 months to 3 years, or a fine; 1 to 5 years if the act is committed by the judicial administrator, the liquidator, or a representative of theirs; 2 to 7 years if it was committed for the purpose of obtaining a financial benefit. Criminal proceedings are set in motion on prior complaint.
Title VIII of Legea nr. 31/1990 contains its own set of provisions with a qualified perpetrator, which frequently appear in the same file, and are set out in detail in the analysis on the offences under the Companies Law.
When the same transactions are charged concurrently under several classifications, checking for overlap in the physical elements is a genuine defence, not a technicality.
To relatives, associates or affiliated companies. Expressly targeted by Article 169(g) and by the annulment action. Repaying one's own loan to the company ahead of the other creditors is the textbook case.
Every day the insolvency application is delayed deepens the presumption of fraud over transfers made in that interval.
In evidentiary terms, cash is the weakest position possible: with no proven destination, it reads as appropriation.
Records that disappear right before the judicial administrator is appointed do not create an evidentiary gap; they create Article 241(a) and Article 169(d).
A document drawn up afterwards but dated earlier turns a defence into a new offence, usually forgery of documents.
Different accounts given by the director, the accountant and the associates, in parallel proceedings, contradict each other and become evidence.
This is the most effective defence against simple bankruptcy, because it removes the physical element of the offence. Filing is not a surrender: it is an act of responsible management, which stops interest from running, suspends enforcement proceedings and opens the way to reorganisation.
Legea nr. 216/2022 rewrote the insolvency-prevention tools in Legea nr. 85/2014, transposing Directive (EU) 2019/1023: the restructuring agreement (negotiated with the affected creditors and confirmed by the insolvency judge) and the preventive concordat (a judicial procedure that suspends enforcement proceedings for 4 months, extendable under the conditions set by law). These are tools for a debtor in financial difficulty, not for one who is already insolvent, so they must be used early.
An independent valuation, payment through the bank, the money going to creditors, a recorded decision. A sale built this way withstands both the annulment action and the bankruptcy accusation.
Handing over the records in full and giving a documented explanation of any unusual transactions is, statistically, the best cost-to-benefit move in the whole procedure.
No, not for simple bankruptcy. Article 240 requires exceeding the statutory time limit by more than 6 months, in practice at least 7 months from the onset of insolvency. A four-month delay stays outside the text. That does not rule out a discussion under Article 169 of Legea nr. 85/2014, if the delay made the liabilities worse, nor an examination of the transactions carried out in that interval.
The main risk is the action to annul fraudulent acts, if what the company gave plainly exceeded what it received, a situation covered for transactions in the last 6 months. On the criminal side, the discussion arises under Article 241(c) only if the disposal was made to defraud creditors while insolvent. The defence is built on documents: a valuation, a comparable market price, actual payment, and where the money went.
That is exactly the figure of preferential payment. As an associate-creditor, you are, in the proceedings, a subordinated creditor; by paying yourself ahead of the others, in the relevant interval, you expose the transaction to annulment and expose yourself to liability under Article 169(g). The fact that the amount was genuinely owed to you does not change the problem; the order and timing of the payment create it.
For both simple and fraudulent bankruptcy, criminal proceedings are set in motion on prior complaint, and withdrawing it removes criminal liability. Two limits, however, are worth noting: withdrawal only has effect for offences conditional on a complaint, not for any embezzlement or tax evasion charged in the same file; and if there are several creditors as injured parties, one of them withdrawing does not extinguish the case against the others.
Informative material, updated on 18 July 2026. It does not constitute legal advice; individual situations must be assessed on their own facts, on the evidence in each file. Nothing in this material amounts to a promise of any particular outcome.
Time limits run from the date of communication. A first conversation clarifies what is being alleged, what you need to substantiate and how the defence is built, before an estimate becomes a tax assessment decision.