Official Text
“Concealment or transfer of property or creation of fictitious debts to defeat claims of creditors in insolvency.”
Legal Analysis
Elements to Prove:
- Pending or contemplated insolvency.
- Dishonest concealment/transfer/fabrication.
- Intent to defeat creditor claims.
Potential Defenses:
- Transactions in ordinary course.
- Good-faith business judgment.
- Full disclosure and fair value.
Practical Examples
What Constitutes the Offense:
Preferential transfers to related parties, sham invoices to inflate claims, dumping assets before proceedings.
What Doesn't Constitute:
Ordinary course transactions at arm's length, bona fide restructuring with disclosures.
Punishment
Imprisonment up to 7 years, and Fine