While we're citing sources, does anyone have a source for this claim that Katitof keeps posting?
There were penal battalions and penal companies.
Penal companies were what in-game battalion description says.
Penal battalions were trained OFFICERS and had supply priority over regular infantry.
I'd like to know where the distinction between "Penal Company" and "Penal Battalion" comes from here because that doesn't make any sense. A Battalion is a larger formation than a Company, comprised of 2-6 Companies as well as command, supply, and and communications elements. One would assume the standard unit designations apply to Penal units, with Penal Battalions being made up of Penal Companies made up of Penal Platoons made up of Penal Squads.
Penal units comprised of disgraced officers did exist and were considered "Elite" and were used as disposable shock troops, but I see no evidence tying the word "Battalion" to the formations of disgraced officers. Aside from the officer formations, most penal troops were enlisted personnel who got in serious trouble, and were issued equipment equal to that of the regular troops.