Fraudulent dealing with property obtained on credit and receiving property from a bankrupt
Fraudulent dealing with property obtained on credit and receiving property from a bankrupt

The following Corporate Crime guidance note provides comprehensive and up to date legal information covering:

  • Fraudulent dealing with property obtained on credit and receiving property from a bankrupt
  • Dealing with property on credit
  • Proceedings under section 359
  • Elements of the offence of dealing with property on credit
  • Defence of innocent intention
  • Sentencing for the offence of dealing with property on credit
  • Receiving property from a bankrupt
  • Sentencing for the offence of receiving property from a bankrupt

Dealing with property on credit

A bankrupt is guilty of an offence if, in the 12 months before the petition, or in the initial period, they disposed of any property which they had obtained on credit and, at the time they disposed of it, had not paid for it.

Section 359 criminalises the situation where a bankrupt obtains goods on credit, and then sells or otherwise disposes of them, often on disadvantageous terms or for inadequate consideration, as a method of raising cash which may be unobtainable by more conventional means. These methods are generally resorted to only by people who are already in serious financial difficulties and prejudice the interest of the unpaid suppliers.

The offence is an either way offence and can be tried either in the magistrates' court or the Crown Court.

Section 251R(1) and (2) creates similar offences in relation to the disposal of property by a person in respect of whom a debt relief order has been made where the property was obtained on credit and has not been paid for.

Proceedings under section 359

Proceedings for an offence under section 354 of the Insolvency Act 1986 (IA 1986) may only be instituted except by the Secretary of State (usually via Insolvency Service Criminal Enforcement Team (ISCET)) or with consent of the Director of Public Prosecutions