Trade and Commercial Law Assessment - Honduras - Economic ...

TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004
HONDURAS
was “fortuitous.” 134 The least fortunate bankrupt is one found guilty of “fraud”; such a finding
makes the debtor subject to criminal penalties, including incarceration and a fine. 135
Given the serious penalties that a finding of “fraudulent” bankruptcy can entail, it does not take
much to create sufficient facts to support such a finding. Robbery and embezzlement obviously
constitute fraud, 136 but failure to keep “all of the account books” or keeping books that are
“altered, falsified or destroyed” is also fraud in the eyes of the Honduran bankruptcy law—an
exacting standard, given the potential rigors of post hoc auditing and the reality that debtors in
extremis tend to become sloppy bookkeepers. 137 However, perhaps the least forgiving criterion
for fraud in the law is that which sanctions the bankrupt for, after the effective date of
bankruptcy, 138 making preferential payments to a given creditor or extending “guaranties or
preferences” to a creditor who had no right to them. 139 This standard is particularly harsh given
that, in the normal course of managing business accounts, unless all creditors are paid in full at
exactly the same time, some creditors always receive preferential payments simply by billing at
different times or for other ordinary accounting reasons.
To drive home the criminal thrust of the bankruptcy law, fraudulent bankruptcy is presumed
whenever the true situation of the debtor cannot be deduced from his or her books. 140 Further,
where the bankrupt is a business entity, the individuals responsible for its administration shall be
“responsible for the acts that classify the bankruptcy” 141 (i.e., the corporate veil shall be pierced
to impose criminal penalties on directors and administrators of the fraudulent bankrupt).
Apart from its preoccupation with assigning blame, its unforgiving standards for doing so, and its
failure to provide a total discharge of all debts even for the fortuitous bankrupt, the provisions of
the Honduras Commercial Code on quiebra are quite modern and serviceable in many of their
specifics, with concepts and principles that echo those in more recent insolvency legislation
around the world. To name one of many examples, it includes dispositions by which the trustee
may accept or reject executory contracts, depending on their benefit to the estate, and subject to a
hearing and court approval. 142
134
That is, the merchant was “overcome by misfortunes that, taken as proper cause even presuming a regular and
prudent process of good commercial administration, reduced his capital to the extreme that he had to cease
payment of his debts.” CdCom, Art. 1399. Even the fortuitous merchant bankrupt cannot regain his or her civil
rights and return to doing business after the bankruptcy, unless and until he or she binds himself or herself
legally to repay the unpaid creditors “as soon as his [post-bankruptcy] situation permits.” CdCom, Art. 1628.
“Guilty” bankrupts must either pay off all debts or wait 3 years for rehabilitation. CdCom, Art. 1629.
“Fraudulent” bankrupts must both pay off all debts and wait 3 years after completion of their criminal penalty or
forever suffer exclusion from exercise of their civil rights and from doing business. CdCom, Art. 1630. Of
course, such sanctions have little effect on a business entity that simply goes out of business. But findings of
“guilty” and “fraudulent” quiebra virtually always implicate individuals who had administrative charge of the
company. See CdCom, Arts. 1401, 1403, 1408 and note 59 infra and accompanying text.
135
CdCom, Art. 1406.
136
CdCom, Art. 1403(I).
137
CdCom, Art. 1403(II).
138
See note 120 supra.
139
CdCom, Art. 1403(III).
140
CdCom, Art. 1405.
141
CdCom, Art. 1408.
142
CdCom, Arts. 1439-1454.
VIII-12