Page 175 [175]
CRIMINAL CONTEMPT IN BANKRUPTCY PROCEEDINGS
contrary to civil contempt authority, “/bJefore imposing sanctions under its inherent
sanctioning authority, a court must make an explicit finding of bad faith or willful
misconduct.”” The higher proving standards ensure also that bankruptcy courts
(with referrals to district courts), imposing criminal contempt sanctions, may
sanction “a broader range of conduct, unlike the civil contempt authority, which
only allows a court to remedy a violation of a specific order (including “automatic”
orders, such as the automatic stay or discharge injunction).”**
Bankruptcy Crimes versus Criminal Contempt of Court
The last short clarification to be raised relates to the question whether there
is a need for criminal contempt rules when a penal system possesses a specific
‘bankruptcy crime’ the function of which is equal with those of criminal contempt?
Some bankruptcy crimes, namely, directly target contemptuous behavior
obstructing the administration of bankruptcy proceedings,” as is the case with
the US federal crime of ‘concealment of assets, false oaths and claims, bribery.
Further exacerbating factor obscuring the picture is that “/c/riminal contempt is
[perceived as] a crime in the ordinary sense.”™*
Still, there are two key distinctions. The first is that criminal contempt serves
the purpose of punishing “repeated or aggravated failure to comply with a court
order” [Emphasis added.] Its function is not merely to punish the wrongdoer but
to discipline the contemnor fast during, and for the sake of, efficient administration
of bankruptcy proceedings.
29 In re Lehtinen, 564 F.3d 1052, Bankr. L. Rep. (CCH) ¢ 81474 (9th Cir. 2009). Williams, Proof
of Motion, 8.
2 Williams, Proof of Motion, 8.
2 The previous Hungarian Bankruptcy Code from 1978 (Law No. IV. of year 1978 on the
Criminal Code), for example, contained a crime named ‘Administrative Obstruction of
Bankruptcy Proceedings’ (“Adminisztrativ csédbiintett” — BTK §290(5)), which could have
been used to punish bankrupt-company officers failing, or refusing, to cooperate with
the appointed bankruptcy practitioner (trustee), among others, by not handing over the
required financial reports. The crime was abolished in 2011. Now §31 of the Bankruptcy Act
(71991. évi XLIX. törvény a csődeljárásról és a felszámolási eljárásról") details the duties of
company officers and §33 foresees fines for infringement of these rules.
Federal bankruptcy crimes are codified as U.S. Code Title 18 (Crimes and Criminal
Procedure), Chapter 9 (Bankruptcy), §§151-158. The leading US authority on bankruptcy
crimes is Stephanie Wickouski, Bankruptcy Rimes, 3" ed. Washington D.C., Beard Books,
2007.
4 Bloom v. Illinois, 391 U.S. 194, 201, 88 S.Ct. 1477, 1481 (1968).
5 Black’s Law Dictionary.
23
* 173 ¢