Asset stripping

A person who conceals or, alternatively, makes all or part of his assets disappear in order to prevent a creditor from collecting a debt owed to him is committing a criminal offence. This is called asset stripping under the Criminal Code and is subject to heavy fines and penalties. Here we will tell you everything you need to know about it.
 

The offence of asset stripping in the Criminal Code

The offence of concealment of property in the Criminal Code is considered to be a crime of frustration of execution. This has been the case since the reform carried out on the occasion of Organic Law 1/2015, of 30 March. It is typified in Chapter VII of Title XIII of Book II and within article 257.

It seeks to punish and prosecute a certain attitude of the debtor. Specifically, it refers to the moment in which, although aware of having one or several debts with one or several creditors, he places himself in a situation of insolvency in order to avoid being obliged to pay them.

This means that the protected legal interest is the creditor's right to enforce the credit granted. Moreover, it is not necessary for the debtor to cause real damage to the creditor by his action. The simple fact of concealing his assets is already punishable.
 

Necessary requirements for the offence of "concealment of property" to take place

Given the above, it may seem very obvious to you to determine when it is and is not considered asset stripping. However, this is not the case. This is evident in the fact that the Supreme Court had to take a position on the matter and set out a series of requirements to consider its commission proven:

• The active subject had to have a monetary debt with a public or private entity at the time of committing the offence.
• It is essential that the creditor, regardless of whether the creditor is a natural or legal person of a public or private nature, had a prior claim.
• The concealment or destruction of the creditor's assets must be sufficient to prevent the creditor from enforcing payment of the debt.
• That the destruction or concealment of such assets leads to a situation of partial or total, real or fictitious insolvency.
• That there is an intention to harm the creditor. As we said before, it is not necessary for damage to be caused in order to consider that a crime has been committed in this case. It is sufficient to attempt to do so.

This offence can be committed against different types of creditors. In fact, the Criminal Code states that it can be applied to:

• Any type of monetary obligation or debt that you are trying to avoid. We are talking, for example, about a mortgage or a personal loan.
• The economic rights of employees. An employer can hide their assets or dispose of their assets in order to avoid paying wages or possible severance payments due to them.

What is asset stripping? Types

Now that we know exactly what asset stripping is and what requirements are necessary to determine its commission, it is time to talk about the different types of asset stripping. Specifically, there are four.

The basic type

It appears in Article 257.1 of the Criminal Code and is considered generic. The aim of the criminal attitude is always to evade the responsibility of paying the debt. It is punishable by a fine of 12 to 24 months and imprisonment of between 1 and 4 years.

The specific offence

Determining when specific asset-grabbing is considered to be a specific offence is a little more complex as there are a number of conducts that are criminalised:

• Preventing or delaying court rulings. It is common for assets to be seized in inheritances and donations with the aim of preventing a seizure or attachment procedure, although it can also occur in other circumstances.
• Avoiding the payment of civil liabilities if they are derived from a crime. Any person who inflicts material or personal damage on a third party is obliged to compensate him for damages. When he conceals his assets in order not to make the payment, he is also committing this offence.
• In both cases, this offence is also punishable by fines of 12 to 24 months and imprisonment of 1 to 4 years.

The aggravated type

The offence is considered as such when the creditor is a public legal entity (Treasury, Social Security, etc.) or, failing this, the payment obligation or debt is related to public law. In this case, the penalties foreseen are between 1 and 6 years and fines of 12 to 24 months.

The attenuated type

This refers to the action of submitting a false or incomplete statement of assets and assets with the purpose of preventing, hindering or delaying the payment of the debt to the creditor. It carries penalties of imprisonment of between 3 months and 1 year and fines of between 6 and 18 months.

Examples and conclusions

Before concluding, and in order to better illustrate what this crime is and how it is committed, we will give some examples:

• Sale of the debtor's assets when the payment is fictitious and not for the purpose of meeting the debt.
• Marital capitulation through a separation of property regime or fictitious divorce with the aim of giving the non-debtor spouse the debtor's assets.
• Giving up assets in inheritances and donations. In this case, the inherited assets are renounced or donated fictitiously to a relative or friend in order to avoid paying the debt.

In short, this crime is much more common than it may seem, although it is true that, in many cases, the concealment or destruction of assets is difficult to prove. In any case, there are legal alternatives to restructure the debts of individuals, facilitate payment and even lead to exoneration. The best example is the so-called second chance law (Law 25/2015 of 28 July).