The Tribunal of Monza (12 October 2015) has adopted a broad application of second para. of Art. 56 of the Italian Bankruptcy Law which excludes – only for receivables non yet overdue – that a debtor of the insolvent may offset its debt against receivables which he has acquired after the declaration of bankruptcy or in the year before.
The bankruptcy receiver of a company (Alfa) served on another company (Beta) a payment order. Beta, in the opposition proceeding against such payment order, argued that its debt should be offset by another receivable based on invoices issued by a third company (Gamma), which was overdue before the declaration of bankruptcy and which was assigned thereafter to Beta.
Art. 56 IBL widely allows for set-‐off in favour of debtors of an insolvent company, even when the counterclaim of the debtors of the insolvent are still not due or are not of the same kind, the only condition being that the facts from which both the claim of the insolvent and the counterclaim arise occurred before the declaration of bankruptcy.
The second para. of Art. 56 sets a limit to set-‐off, only for receivables against the insolvent which are not overdue on the date of the declaration of bankruptcy, when these are assigned during the year before. The issue is therefore if – when it comes instead to receivables which are overdue – the debtor of the insolvent can freely purchase such receivables even after the declaration of bankruptcy for the purpose of setting them off against his own debt towards the insolvent.
The decision of the Tribunal
The Tribunal of Monza ruled out a set-‐off and rejected the opposition.
The rationale starts from the wording of Art. 56 IBL excluding set-‐off only for assignments of receivables against the insolvent which are not overdue, but it comes then to offer an extensive interpretation applying also to receivables which are already overdue before bankruptcy, when the specific facts of the case indicate that there was a so-‐called “abuse of a right”. The Tribunal then follows here a general principle according to which nobody can avail himself of a provision of law, when this is based on factual circumstances making clear that the underlying reasons based on which the law grants a relief are not satisfied in the specific case and therefore there is an unjustified unbalance between the relief granted and the sacrifice imposed on the other party.
Such an abuse in the specific case was found in the fact that Beta and Delta were companies of the same group, that the receivable was assigned at a time close to the payment request sent by the receiver of the Alfa bankruptcy procedure and that consideration for the assignment was merely nominal.
In other words, set-‐off according to Art. 56 IBL could not occur when the relevant claim and counterclaim do not arise from normal commercial dealings of which the insolvent company was a party, but rather exclusively for the reason that the debtor having been requested to pay its debt purchases an overdue counterclaim for a nominal consideration with the exclusive aim to avoid paying its own debt.
The decision of the Tribunal must be considered in a context where the few precedents confirmed – also at a constitutional law level – that set-‐off of assigned overdue receivables is lawful: the Italian Constitutional Court has indeed conformed that it is in the lawmakers’ discretion to set conditions to avoid that undue set-‐offs could damage the bankruptcy estate, stating that the difference between overdue and not overdue receivables lies in the fact that only for overdue receivables the relevant effect cancelling the opposite claim and counterclaim already occurred before the declaration of bankruptcy (Constitutional Court, 20 October 2000, No. 431).
This was not indeed a persuasive rationale, and this is why the decision of the Tribunal of Monza stands as a meaningful one: when it is clear, in the circumstances of the specific case, that the debtor is trying to “abusively” avail himself of a remedy at law, the same rationale occurs which excludes -‐ according to the second para. of Art. 56 IBL -‐ that set-‐off can be considered as an enforceable remedy.