Article 257 Spanish Criminal Code: Frustration of Enforcement and Asset Stripping

Article 257 of the Spanish Criminal Code punishes the debtor who puts his assets beyond the reach of creditors, and any act of disposition or assumption of obligations intended to delay, obstruct or defeat an attachment or an enforcement procedure, whether judicial, extrajudicial or administrative, already begun or foreseeable. The article applies whatever the nature of the debt, and it applies where the purpose is to evade the civil liability arising from an offence. Where the creditor is a public body, or the debt derives from an offence against public revenue or social security, the penalty rises to one to six years.

Wording of Article 257 of the Spanish Criminal Code

Elements of the offence

1. A pre-existing debt or obligation, of any nature, including one not yet the subject of proceedings provided that enforcement was foreseeable.
2. An act of disposition, the assumption of obligations, or the concealment of assets against which enforcement could be effected.
3. The purpose of delaying, obstructing or defeating the enforcement, or of evading civil liability arising from an offence. Purpose is the central element and must be proved.
4. That the assets disposed of were within the reach of enforcement. The disposal of an asset already charged in full, or exempt from seizure, does not frustrate anything.

Defence strategy

The disposal had an independent commercial purpose. The offence requires the purpose of defeating the creditor. A sale at market value whose proceeds were applied to other debts, a transfer made in performance of an earlier binding commitment, a mortgage taken out to fund the business and a division of assets agreed in a matrimonial settlement all have their own explanation. The defence documents the destination of the proceeds, because an asset sold for value at the proper price does not diminish the estate available to creditors.

The enforcement was not foreseeable. For the second modality, the enforcement must have been begun or foreseeable. Where the disposal preceded any claim, demand or notification, and where the debt was disputed on reasonable grounds at the time, foreseeability is absent. The chronology of the demands against the date of the disposal is prepared with the registry entries and the correspondence, since these prosecutions are habitually built on hindsight.

Remaining assets and absence of harm. Where the debtor retained sufficient assets for the enforcement to be satisfied, the creditor was not prejudiced and the offence is not made out. The defence produces a complete statement of the estate at the material date, including assets abroad, because the prosecution ordinarily examines only the asset transferred.

The public-law aggravation and the insolvency route. The higher bracket applies only where the creditor is a public legal person or the debt derives from a revenue or social security offence, and it is habitually asserted where the debt is in fact of private law. Separately, the fifth paragraph makes clear that subsequent insolvency proceedings do not extinguish the offence, so the defence must address the criminal exposure directly rather than relying on the insolvency, while using any approved arrangement with creditors as evidence of reparation.

• Article 250: aggravated fraud
• Article 301: money laundering
• Civil liability and confiscation
• Spanish-language entry

This entry is provided for information only and does not constitute legal advice. The application of any provision depends on the circumstances of the individual case and requires examination of the case file by a qualified lawyer.