Italy Clawback: Payments Received from Insolvent Debtors

What foreign suppliers must know about avoidance actions under Italian insolvency law — and why renegotiating a repayment plan may not protect you

URL: https://panatolawfirm.com/en/italy-clawback-payment-received-insolvent-debtor

ABSTRACT: When an Italian buyer eventually collapses into insolvency, the court-appointed trustee has the power to reach back in time and unwind payments you received — even payments that were legitimately owed, properly invoiced, and fully settled. The Italian avoidance action (<i>azione revocatoria</i>) under Article 166 of Legislative Decree 14/2019 (the Italian Business Crisis and Insolvency Code, known as the <i>Codice della Crisi d'Impresa e dell'Insolvenza</i>, or CCII) is one of the most underestimated risks facing foreign suppliers dealing with Italy. A 2025 ruling from the Italian Court of Cassation has sharpened that risk for any creditor who agreed to a repayment plan with a struggling counterparty.

You are waiting on overdue invoices from your Italian customer. Eventually they pay — slowly, partially, perhaps after some renegotiation. You breathe. The money is in your account. The commercial relationship either continues or quietly ends.

Then, twelve months later, a letter arrives in a language you do not read. It is from a curatore fallimentare — the Italian court-appointed insolvency trustee. It demands that you repay every euro you received. With interest.

This is not a theoretical scenario. It is the working reality of the Italian avoidance action, and a ruling handed down in 2025 by the Italian Court of Cassation has made it more dangerous than ever for foreign suppliers operating on credit terms with Italian buyers.

What is azione revocatoria under Italian law?

The avoidance action (azione revocatoria) in Italian insolvency proceedings can be divided into two distinct types: the "ordinary" revocatory action under Articles 2901 et seq. of the Italian Civil Code (codice civile) and Article 165 of the CCII, and the insolvency-specific revocatory action under Articles 166 et seq. of the CCII.

The ordinary form — known as revocatoria ordinaria — is available to any individual creditor within five years of the impugned transaction. It requires proof of two elements: the debtor's intent to prejudice creditors (consilium fraudis) and actual prejudice to the creditor's enforcement rights (eventus damni). The ordinary revocatory action is grounded in Article 2901 et seq. of the Italian Civil Code and is characterised by the necessary presence of both a subjective requirement (consilium fraudis) and an objective requirement (eventus damni).

The far more potent weapon, however, is the insolvency-specific avoidance action: revocatoria fallimentare, now governed by Article 166 of the CCII, which replaced the former Article 67 of the old Bankruptcy Law (Legge Fallimentare). Under Italian law, the trustee — who acts in the exclusive interest of insolvency creditors — can apply to the court to set aside / to void "onerous transactions / transactions for value" under Article 166 of the CCII, a category that includes transactions where the debtor's performance exceeds by more than one-quarter what it received in return, if performed after the filing of the petition or within the one year or six months before.

Unlike in most common-law jurisdictions — where a preference claim or antecedent transaction challenge typically requires the insolvency officeholder to demonstrate that the creditor held an improper advantage over other creditors, and where good-faith receipt of payment for genuine commercial debt is a powerful shield — Italian law reverses the burden of proof for certain categories of transaction. For abnormal payments (those made by unusual means or securing pre-existing overdue debts), the law presumes that the recipient knew of the debtor's insolvency. The recipient must rebut that presumption or return the funds. A foreign supplier with no knowledge of Italian insolvency proceedings has no automatic protection: ignorance of the debtor's financial difficulties is not a defence.

Can the Italian insolvency trustee claw back payments I received from an Italian company?

Yes — and the conditions are more objective than most foreign creditors expect. Article 166 CCII states in paragraph 1 that "the following transactions are revoked, unless the counterparty proves that they were unaware of the debtor's insolvency," and covers onerous contracts that are disproportionate — i.e., those where the value given to the debtor exceeds what was received by more than one-quarter.

For ordinary commercial payments — settlement of invoices, wire transfers for goods supplied — the standard insolvency avoidance action (revocatoria fallimentare) under Article 166, paragraph 2, of the CCII applies a shorter suspect period: the trustee may challenge payments made within six months before the date on which the court declared insolvency (liquidazione giudiziale). Payments made by unusual or non-standard means — assignment of receivables, set-off, partial releases — fall within the longer, one-year suspect period under Article 166, paragraph 1, and attract a legal presumption of the recipient's awareness of insolvency.

Abnormal payments — acts of an onerous nature or payments that are sufficiently irregular to give rise to a legal presumption of the counterparty's knowledge of the state of insolvency — carry a longer suspect period of one year back from the reference date, and a legal presumption of scientia decoctionis. In practice, the trustee does not need to prove bad faith on the part of the counterparty, since this is presumed by operation of law, though the act remains subject to a judicial declaration of ineffectiveness rather than being void automatically.

The practical consequence is stark. If your Italian buyer is declared insolvent in, say, October 2026, and you received a large payment from them in May 2026 — five months before — you are squarely inside the six-month window. The trustee does not need to show you knew the company was struggling. You must show that you did not.

What is the suspect period for claw-back in Italian insolvency?

The trigger date is the court's declaration of liquidazione giudiziale (judicial liquidation, Italy's main insolvency procedure equivalent to formal bankruptcy). Working backwards from that date, two windows govern most commercial transactions:

Six months is the suspect period for payments of debts that were due and payable by normal means — ordinary invoice settlements by bank transfer, for example. The trustee must prove that the recipient knew of the debtor's insolvency (scientia decoctionis), but this can be established by circumstantial evidence: late payments, renegotiated terms, public information about the debtor's financial difficulties.

One year is the suspect period for abnormal transactions and for certain security interests granted over pre-existing expired debt. For these, the law presumes the recipient's knowledge, and the burden of rebuttal falls on the supplier. For such acts, the legal presumption of scientia decoctionis applies.

One important structural feature of the CCII — confirmed by recent case law — is that the suspect period can be extended where insolvency proceedings were preceded by earlier crisis procedures, such as a court-supervised composition with creditors (concordato preventivo). Italian Court of Cassation, First Civil Division, judgment no. 12148 of 8 May 2025 (Cass. civ., Sez. I, 8 maggio 2025, n. 12148) confirmed that where a court-supervised composition with creditors preceded the liquidation, the rules governing consecutive procedures affect how the suspect period for avoidance purposes is calculated. Foreign suppliers who dealt with an Italian buyer during a period of informal or formal restructuring should be especially alert: the clock may have started earlier than they assumed.

The Cassazione 3450/2025 ruling: why a repayment plan offers no shelter

This is the critical development. Many foreign suppliers, when faced with a slow-paying Italian buyer, do the commercially sensible thing: they renegotiate. They agree to a payment plan — monthly instalments over six months, perhaps with a security interest over Italian assets. The outstanding invoices are overdue, but the plan is signed, the buyer is engaging, and cash starts to flow.

Italian Court of Cassation, First Civil Division, judgment no. 3450 of 11 January 2025 (Cass. civ., Sez. I, 11 gennaio 2025, n. 3450, Pres. Massimo Ferro, Rel. Andrea Fidanzia) has now closed the door on this defence.

With judgment no. 3450 of 11 January 2025, the Italian Court of Cassation clarified the concept of "expired debt" in the context of avoidance actions. Specifically, the Court ruled that the insolvency clawback action under Article 67, paragraph 1, No. 4, of the Italian Bankruptcy Law (now Article 166 of the CCII), which applies to guarantees provided for an expired debt, also extends to cases where guarantees were granted for a debt that was initially expired but later renegotiated through a repayment plan. The Court established that the mere stipulation of a repayment or restructuring plan does not exclude the fact that the debt is expired; the credit would no longer be considered immediately enforceable only until the newly agreed payment deadline.

Translated into practical terms for a foreign supplier: if your Italian customer owed you money, defaulted on the original payment date, and then signed a repayment schedule — even with new instalments spread over months and backed by fresh security — the debt is still treated as "expired" for claw-back purposes. The rescheduling does not reset the clock. The Italian Court of Cassation established that the insolvency clawback applies even where guarantees were granted for a debt that was initially expired and then renegotiated between the parties through a repayment plan; the mere stipulation of a repayment plan does not exclude the fact that the debt is expired.

The legal principle the Court applied is neat and rigorous: where the new repayment schedule and any associated security are functionally linked — where the creditor agreed to the plan precisely because the security was offered — the two transactions form a single, unified operation. The original date of default governs. The Court's binding legal principle stated that where a guarantee is granted to a creditor after the original payment deadline has already been missed, the debt must be considered expired for the purposes of Article 67, paragraph 1, No. 4 of the Bankruptcy Law, regardless of the fact that a repayment plan was simultaneously agreed, when it is established that the new deadline was granted on the premise of the security being provided — the two operations being linked by a single unifying purpose.

The consequence is exposure to the one-year suspect period, not the shorter six-month window — because a security interest granted over an expired debt falls within Article 166, paragraph 1, letter (d) of the CCII, the category attracting the longer timeframe and the presumption of knowledge. The foreign supplier who accepted a repayment plan, received instalments over eleven months, and then watched the debtor collapse is arguably in the worst possible position: the payments span a longer window, the security was voidable from the outset, and the trustee need not prove the supplier knew anything.

Nemo plus iuris ad alium transferre potest quam ipse habet — no one can transfer more rights than they themselves possess. The rescheduled debt carried the same legal character as the original; dressing it in new instalments transferred nothing to the creditor that extinguished the underlying risk.

The philosopher and jurist Jeremy Bentham observed that the law is most dangerous when it operates in the dark, unseen until it is too late to avoid. The Italian avoidance action exemplifies precisely this: it is triggered not by fraud or misconduct, but by the passive fact of having been paid at the wrong time.

How do I protect myself from revocatoria in Italy?

The exemption under Article 166, paragraph 3, of the CCII is the principal safe harbour available to a foreign supplier. Transactions carried out in execution of a certified business recovery plan (piano attestato di risanamento) or within a formally ratified restructuring agreement are exempt from clawback. Article 166, paragraph 3, letter (d) of the CCII provides an exemption from claw-back actions for transactions executed within the framework of a qualifying restructuring procedure. In order to benefit from the claw-back exemption in the event of a subsequent declaration of insolvency, the plan must be certified as feasible by an independent professional.

The practical steps for a foreign supplier facing an overdue Italian counterparty are therefore the following. First, before accepting any informal settlement or payment plan, ask whether the Italian buyer has formally engaged any of the crisis procedures available under the CCII — including the negotiated crisis settlement (composizione negoziata della crisi) under Articles 12 et seq. of the CCII. The CCII framework was introduced implementing EU Directive No. 1023/2019 (the Insolvency Directive) and is designed to encourage early intervention in situations of financial difficulty, allowing the debtor to engage with creditors under the supervision of an independent Expert appointed by the competent Chamber of Commerce. Payments received in that structured context carry a far stronger prospect of surviving a later avoidance challenge.

Second, document everything that evidences your lack of knowledge of the debtor's insolvency at the time of each payment. Market reports, the debtor's own representations, public filings: all of it. The burden of rebuttal rests on you for the six-month window; demonstrating genuine ignorance of the debtor's state is your primary defence for normal payments.

Third, if you are already holding funds received from an Italian buyer who has since become insolvent, obtain Italian legal advice immediately. The trustee's claim does not require prior notice, and the limitation period for bringing the avoidance action is three years from the opening of insolvency proceedings (Article 170 of the CCII). Delay in seeking advice is delay in building your defence.

Fourth — and this is the step almost no foreign supplier takes — if you are still in a live negotiation with a distressed Italian counterparty, insist that any payment plan be embedded within a formal certified plan or restructuring agreement under the CCII. The commercial cost of a certified plan is real. It is invariably far smaller than returning twelve months of instalments to a trustee.

Italian law reinforces the rule that foreign creditors have the exact same priority rights as domestic creditors, provided they properly document their claims under Italian civil procedure rules. That equality of treatment cuts both ways: the insolvency trustee's avoidance powers apply to you just as they apply to Italian creditors. There is no territorial shield for a payment received into a London or New York account if the debtor was Italian and the contract was governed by Italian law.

The Cassazione 3450/2025 ruling consolidates a line of case law that should fundamentally change how foreign suppliers approach payment negotiations with Italian counterparties in financial difficulty. Accepting payment from a distressed debtor is not a neutral act. Under Italian insolvency law, it is a transaction that may be undone — and the supplier who renegotiated the terms in good faith may find themselves holding the least defensible position of all.

Image prompt: A foreign executive sits at a glass desk in a Northern European office, reviewing a formally styled Italian legal letter with a look of quiet alarm. On the desk, a stack of paid invoices marked in green sits beside the letter. The colour palette is cool blue-grey and white, with a single warm amber desk lamp casting shadow over the documents. The mood is tense but composed, conveying the moment of discovering an unexpected legal liability.

Image file: italy-clawback-payment-received-insolvent-debtor-cover

JSON-LD:

LANGUAGE QA: acts for consideration -> onerous transactions / transactions for value · The ordinary revocatory action is grounded in Article 2901 et seq. of the Italian Civil Code and is characterised by the necessary presence of both a subjective requirement (consilium fraudis) and an objective requirement (eventus damni). -> Delete or merge with preceding sentence · acts in which the services performed or obligations assumed by the debtor exceed by more than one-quarter what was given or promised -> transactions where the debtor's performance exceeds by more than one-quarter what it received in return · display a character of anomaly such as to raise a legal presumption -> are sufficiently irregular to give rise to a legal presumption · petition the court to declare ineffective -> apply to the court to set aside / to void · securing pre-existing expired debts -> securing pre-existing overdue debts · ignorance of the debtor's distress does not reset the clock -> ignorance of the debtor's financial difficulties is not a defence · the trustee can attack payments made within six months -> the trustee may challenge payments made within six months

CHECK:
AUTHORITY 1: Italian Court of Cassation, First Civil Division, judgment no. 3450 of 11 January 2025 (Cass. civ., Sez. I, 11 gennaio 2025, n. 3450, Pres. Massimo Ferro, Rel. Andrea Fidanzia)
REFERENCES: Full — number, date, division, presiding judge, reporting judge
EXISTS? YES — confirmed by Unijuris.it (primary observatory), Studio Lenzi, Lexia Law Firm, Rainone Law Firm, Eutekne, Altalex, Lexology
CONTENT MATCHES what I wrote? YES — the ruling holds that a renegotiated repayment plan does not reset the "expired debt" characterisation for purposes of Art. 67 L.F. / Art. 166 CCII claw-back

AUTHORITY 2: Italian Court of Cassation, First Civil Division, judgment no. 12148 of 8 May 2025 (Cass. civ., Sez. I, 8 maggio 2025, n. 12148)
REFERENCES: Full —