Bank loans and avoidance actions: financing may also be ineffective

The case

A bank sought admission of a claim of approximately €300,000 arising from an unsecured loan granted in 2020 and covered for 80% by the Italian SME Guarantee Fund.

The claim was excluded to the extent already satisfied through the public guarantee and, for the balance, following the practitioner’s avoidance defence.

The loan had been concluded within six months before an application for composition with creditors. The lower court found that the bank knew of the company’s insolvency, relying in particular on negative net assets and loss of going concern shown by the accounts.

A loan is an avoidable act for consideration

The bank argued that the loan had not depleted the company’s assets because the repayment obligation was matched by the liquidity advanced. The Court rejected that argument.

Under Article 67(2) of the former Italian Bankruptcy Law, separate proof of harm to creditors is not required. It is sufficient that the act for consideration occurred during the suspect period and that the practitioner proves the counterparty’s knowledge of insolvency.

A loan falls within that category. Although the company receives liquidity, the agreement also creates a liability to repay principal and interest, increasing the liabilities competing for the debtor’s assets.

No separate avoidance action is required

Ineffectiveness may be raised as a defence during proof-of-debt proceedings. The practitioner need not first obtain a separate judgment avoiding the agreement.

The defence defeats the contractual claim and may be raised even when a standalone avoidance action can no longer be brought, under Article 95 of the former Bankruptcy Law.

Repayment of the principal advanced

Ineffectiveness against the estate does not necessarily mean that the proceedings may permanently retain the money received.

The Court distinguished the contractual loan claim from a separate restitution claim for the principal advanced, which may be based on unjustified payment under Article 2033 of the Italian Civil Code.

In this case that claim could not be considered because it had not been properly renewed and had become subject to an internal final ruling. Banks must therefore assess promptly whether and how to plead and preserve an alternative restitution claim.

Knowledge of insolvency

Avoidance is not automatic. The practitioner must prove that, when the loan was concluded, the bank knew that the borrower was insolvent.

Knowledge may be established through serious, precise and consistent presumptions. The negative financial position, loss of going concern and information the bank should have obtained during its credit assessment were relevant in this case.

The public guarantee did not release the bank from ordinary creditworthiness checks. Emergency legislation still required verification that the company’s difficulties did not pre-date the pandemic and that full repayment could reasonably be expected.

Continuity between restructuring and bankruptcy

An eighteen-month interval did not, by itself, exclude continuity between the composition proceedings and the later bankruptcy. Whether both resulted from the same insolvency is a factual assessment for the lower court.

That assessment affects the suspect period and must be based on the company’s financial development, not merely the time between proceedings.

Relationship with the Italian Crisis and Insolvency Code

The order applies Articles 67 and 95 of the former Bankruptcy Law because the proceedings were governed by the previous legislation.

For judicial liquidations under the current Crisis and Insolvency Code, the principle must be compared with Articles 166 and 203. They govern avoidance of acts for consideration and the practitioner’s right to plead ineffectiveness of the title supporting a claim or priority.

The continuity of these mechanisms makes the decision relevant under the current framework, but each case still requires examination of transitional rules, exemptions, the type of proceeding and the financing involved.

Practical implications

A bank seeking admission must document its pre-loan assessment, the borrower’s known financial condition, the reasons for the positive credit decision, any avoidance exemptions and any alternative or subsidiary restitution claims.

For practitioners, the decision confirms that the loan title may be challenged directly during proof-of-debt proceedings, provided the suspect period and knowledge of insolvency are established, including by presumptions.

Conclusions

Order No. 25399/2026 confirms that providing liquidity does not place a loan outside insolvency avoidance rules.

Financing may be ineffective when concluded during the suspect period with knowledge of the borrower’s insolvency. Ineffectiveness of the contractual title does not necessarily prevent restitution of principal, but that claim must be pleaded promptly on the correct legal basis.

The assessment therefore requires coordinated review of the agreement, the bank’s credit investigation, the company’s financial position and the claims made in proof-of-debt proceedings.