The bankruptcy claw-back action in Italy. In a nutshell.
written by Alberto Angeloni
One of the main actions in defense of the bankruptcy-estate is the claw-back action governed by §§ 64 to 71 of the Italian Bankruptcy Law – IBL.
Generally, between the onset of insolvency and the formal opening of the ordinary bankruptcy proceeding (Fallimento) the debtor, running the business, performs payments, executes contracts or carries out other transactions that affect the assets of the company. Commonly, these are lawful activities. Indeed, the insolvent businessperson may, for example, perform regular payments, pay overdue debts and execute contracts. Nonetheless, the IBL deems detrimental (and improper accordingly) certain activities carried out in the period preceding the formal opening of the ordinary bankruptcy proceeding, if they deplete the assets and if they are carried out with persons who knew the state of insolvency of the debtor. Occurring such circumstances, indeed, it is presumed, that these activities favor certain persons/creditors at the expenses of others. For this reason, following the opening of the ordinary bankruptcy proceeding, the bankruptcy-trustee appointed by the Court may act against the beneficiaries of such transactions through the claw-back action. If the claw-back action is successful, the acts of the debtor which have jeopardized the company’s assets are rendered ineffective vis-à-vis the general body of the creditors. Goods and money are so collected in the interest of the bankruptcy-estate and for the benefit of all the creditors. In most cases, the bankruptcy-trustee may obtain the revocation of the acts by exercising a legal action (lawsuit) that seeks the declaration of invalidity of the relevant detrimental act.
As a result of the claw-back judgment, the act, the payment, the contract or guarantee shall be deemed ineffective vis-à-vis the bankruptcy-estate and the bankruptcy-trustee can foreclose on the relevant asset, demand the return of the sum paid by the debtor or render ineffective the guarantee which had been granted.
The law offers several defenses for a defendant in claw-back action.
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Italian Bankruptcy Law 