Contribution by Avv. Angela Currarini published on N&T Plus Diritto – Il Sole 24ORE. The Supreme Court, with the recent judgment no. 24725 of 14 September 2021, draws the boundary between “meritorious” financing by a bank in favor of an enterprise and “abusive” financing, constituting an unlawful act of the financing bank which, consequently, is liable to compensate the Bankruptcy of the financed enterprise, in the meantime bankrupt, for the damage caused to the enterprise and to the body of creditors.

The First Section of the Court of Cassation, reproducing word for word the content of its previous judgment no. 18610/2021, reconstructs in an articulate and systematic manner the issue of bank liability for abusive credit granting and affirms the unlawfulness of the conduct of the bank which, in violation, whether willfully or negligently, of the specific behavioral obligations to which it is bound in the exercise of credit, grants or renews or merely maintains credit lines to an enterprise that does not possess adequate creditworthiness.

Conversely, financing granted by the bank to an enterprise which, albeit in a situation of economic-financial difficulty, and even outside a crisis resolution procedure, presents, according to an assessment of credit risk to be made ex ante, reasonable prospects for recovery, is considered lawful.

As is well known, bankruptcy law regulates only the conduct of abusive recourse to credit, under art. 218 of the Bankruptcy Law, incorporated into art. 325 of the Code of Crisis and Insolvency of Enterprises (intended, it would appear following the latest postponement, to enter into force on 16 May 2022 and, as regards alert procedures and assisted crisis composition, on 31 December 2023): criminal sanctions are provided for administrators, general managers, liquidators or entrepreneurs engaged in commercial activity who resort to or continue to resort to credit while concealing the insolvency or state of insolvency of the company.

Against the corporate bodies, the receiver may then act, ex art. 146 of the Bankruptcy Law, to obtain compensation for damage caused; the orientation that is consolidating with the judgment in question recognizes also to the receiver the standing to act against the bank as well, jointly and severally liable for having granted or continued to grant credit to the enterprise in violation of the principles of sound and prudent management and in the absence of the prerequisites of creditworthiness.

As this is a case of optional joinder of parties, the receiver may choose whether to act against the bank alone or against the corporate bodies alone (or only some of them).

The judgment has the merit of examining in depth the parameters on the basis of which the conduct of the bank must be assessed: the latter is required to comply with the principles of sound and proper management as set forth by the special provisions provided by banking regulations which impose precise procedures for the assessment of credit risk in order to verify the creditworthiness of the requesting enterprise, within which the bank may, and indeed must, also avail itself of information obtainable from the Central Credit Register to ascertain the debt exposure of the requesting enterprise, also taking into account the regulatory framework outlined by European banking sector regulations for the harmonized management of credit risk (in particular with the Basel Accords).

The Court affirms the important principle that the duties, rules and conduct required of the bank by the regulations governing the banking sector constitute a source of behavioral obligations on the “banking entrepreneur subject”, from whose violation damage may derive not only to the market but also to each improperly financed subject, for which the bank is called to answer.

Abusive credit granting is attributed to the category of liability arising from “qualified social contact”, a direct source of obligations pursuant to art. 1173 of the Civil Code, attributable to the particular status of qualified professional operator held by banks; this is pre-contractual liability in the event of credit granting (the bank has engaged in negotiations that it should not have undertaken), contractual liability in the event of maintenance of ongoing financing (the bank has unjustifiably maintained credit lines that it should have suspended or revoked).

From abusive credit granting, damage derives directly to the financed company: the new financing, as well as the maintenance of existing financing, cannot in fact constitute a patrimonial increase for the enterprise, but entails damage consisting in the diminution of the consistency of the social patrimony, as a result of interest and other passive charges deriving from the financing that burden the enterprise, in addition, of course, to the obligation to repay the capital.

Another aspect of damage is represented by the aggravation of losses caused by the undue prolongation of the enterprise’s activity, since in a pathological situation the liquidity obtained with the financing very rarely proves suitable for the recovery of the enterprise but is often used to pay short-term debts, allowing the corporate bodies to further conceal the insolvency and cause further damage to the social patrimony: in a situation of insolvency, the law requires the administrators of the company to activate one of the instruments provided for overcoming the crisis and recovering business continuity (art. 2086 of the Civil Code as reformed by the CCII) and to limit themselves to merely conservative management of the integrity of the social patrimony (ex art. 2486 of the Civil Code), in order to contain damages and not further compromise the social patrimony.

The granting of new credit favors the violation by administrators of the above obligations by feeding the “artificial maintenance in existence” of the company, and, therefore, causes damage consisting in the aggravation of insolvency, with consequent compensatory liability of banks and administrators jointly and severally.

The Supreme Court indeed recognizes the importance attributed in principle by the legal system to the role of banks in supporting enterprises in crisis (even more so following the Covid-19 emergency) and in this regard emphasizes the favor shown by the legislator for financing by banks to enterprises, implemented through various instruments (exemption from bankruptcy, priority deduction of financing, moratorium on credits, bridge financing or interim financing), especially within crisis regulation procedures; such instruments, however, are justified provided they are inserted in a context, according to an ex ante assessment based on creditworthiness, of the possibility of recovery of the enterprise, and this not only within the proceduralized and controlled framework of the institutes provided by the legislator for the resolution of enterprise crisis but also outside of them, where the overcoming of the crisis is nonetheless feasible according to an objective, reasonable and feasible project.

The receiver may act against the bank for abusive credit granting not only for direct damages caused to the patrimony of the bankrupt company (as successor in the rights thereof ex art. 43 of the Bankruptcy Law) but also, on the basis of tort liability, for indirect damages suffered by the body of creditors prejudiced by the aggravation of insolvency and the consequent overall diminution of the consistency of the patrimony resulting from the prolongation of the enterprise’s activity, from which derives the reduction of the possibilities of satisfaction of the body of competing creditors: compensation from the bank that has unlawfully granted or maintained the financing in being allows, in fact, to restore the social patrimony to the benefit of all competing creditors.

However, the compensatory liability of the bank towards the Bankruptcy for abusive credit granting does not prevent the same bank from filing a claim in the liabilities for the restitution of the financed sums not repaid, being able to coexist in the same subject the quality of debtor and creditor of the Bankruptcy (as often occurs in relations between Bankruptcy and banks, in primis as a result of the exercise of revocatory actions).

The judgment then considers that the burden rests on the receiver to prove: (i) the unlawful conduct of the bank which must be, as stated, characterized by willfulness or at least negligence; (ii) the damage (consisting of both the continuation of the enterprise’s activity at a loss and the aggravation of insolvency); (iii) the causal nexus between conduct and damage.

Where the unlawfully financed company has contributed through the conduct of its administrators to the production of damage, for example by reiterating the request for financing in the absence of creditworthiness, the compensation charged to the bank should be reduced pursuant to art. 1227 of the Civil Code, in an amount equal to the quantum of damage caused by the conduct of the company itself; this, however, only where the receiver acts for damages directly to the company, but not in the case, more frequent, in which it acts on behalf of the body of creditors to restore the patrimony to be allocated to the satisfaction of such body, the receiver in this case asserting the interest of a third party (the creditor class) with respect to the financed company, with consequent inapplicability of the unlawful conduct of the latter.