Fraudulent Bankruptcy — Conviction Overturned on Appeal

Our client had been convicted at first instance for fraudulent bankruptcy in connection with the collapse of a company he directed. We took over the defence at the appeal stage and succeeded in overturning the conviction, obtaining a full acquittal on all charges.

The bankruptcy and conviction

The company directed by our client entered insolvency proceedings. The prosecution alleged that our client had engaged in fraudulent acts prior to the bankruptcy — specifically, the improper transfer of company assets and the falsification of accounts — with the intention of concealing assets from creditors. He was convicted at first instance and faced a substantial custodial sentence. He retained our firm to conduct the appeal.

Appeal strategy

Our review of the first-instance proceedings identified critical errors in the assessment of the forensic accounting evidence. The prosecution's expert had attributed losses to fraudulent conduct without adequately excluding legitimate business explanations. We instructed our own forensic accounting expert, whose analysis demonstrated that the alleged fraudulent transfers were in fact legitimate business transactions, and that the apparent accounting irregularities were attributable to errors in the first-instance expert's methodology.

In fraudulent bankruptcy cases, the distinction between entrepreneurial failure and criminal fraud is not always clear. The prosecution often characterises business decisions taken in a crisis as fraudulent acts. A rigorous forensic accounting analysis is essential to establish what the evidence actually shows.

Outcome

The Court of Appeal overturned the first-instance conviction and acquitted our client on all charges. The forensic accounting analysis we presented was decisive. Our client avoided a custodial sentence and the reputational destruction that a confirmed conviction would have entailed.