Doctrine of deepening insolvency suggests that where the corporation is artificially prolonged through fraud or wrongful conduct, such existence cannot be deemed beneficial to either the corporation or its creditors. Fraudulent prolongation of a corporations life beyond insolvency is resulting in damages to the corporation caused by increased debt in which corporate assets are alienated. Theory of deepening insolvency can be recognized as a claim based upon the fraudulent expansion of corporate debt and prolongation of corporate life, therefore in those cases proving fraud is an essential element. In fewer cases it can be recognized as a claim based upon negligence alone. From a sample of four joint-stock corporations in the Republic of Croatia it will be determined whether the insolvency reasons for initiating bankruptcy proceedings existed long before it was initiated and whether the board members took responsibility for it or delayed the bankruptcy while the company continued to incur losses.