Revocation of demerger deed: green light from the Court of Cassation and the European Court of Justice

The Supreme Court of Cassation first and the EU Court of Justice shortly afterward ruled on the admissibility of demerger deed revocation.

The Court of Cassation Judgment’s factual background

The case arises from a dispute between Equitalia Centro S.p.A. (the Italian tax collection agency now called “Agenzia delle Entrate – Riscossione” – “Equitalia”) and a debtor company (“Debtor Company”) for the subtraction of certain assets from Equitalia’s patrimonial guarantee.

In particular, the Debtor Company transferred parts of its business to another company (“Beneficiary Company”), which—subsequently—demerged into a further company (“Spun-off Company”) (all together, the “Companies”).

In light of the above, Equitalia brought a civil action against the Companies, asking the court to deem the transfer and demerger deeds of a fictitious nature or, in a subordinate claim, to declare them ineffective pursuant to Article 2901 of the Italian Civil Code (“CC”), which allows the creditor to obtain a declaration of ineffectiveness against certain debtor’s acts affecting its credit. This action (“Revocatory Action” or “Actio Pauliana”) prevents fraudulent transactions by a debtor aimed at evading its debts.

Equitalia’s claims were granted both by the court in the first instance and by the Court of Appeals of Bologna. Therefore, the Debtor Company appealed to the Court of Cassation.

Legal issues and Court of Cassation decision

The legal obstacle that in the past cast doubt on the admissibility of the Revocatory Action with regard to the demerger deed is that Article 2504 quarter CC—as applied by the case-law—provides that once the demerger deed is recorded in the register of companies (“Register of Companies”), it can no longer be pronounced invalid; shareholders or third parties harmed by the demerger can only seek compensation for damages (of note, the same rule applies to mergers).

Indeed, pursuant to Articles 2506 ter, 2503 and 2502 bis CC, a creditor of a spun-off company who feels damaged by the demerger is required to oppose it within 60 days of the filing of the demerger deliberation in the Register of Companies.

The central question, therefore, was the following: once registrations have been made, as in the case at issue, does Article 2504 quarter CC preclude a Revocatory Action?

With judgment No. 31654 of December 4, 2019, the Court of Cassation answered this question, ruling that a Revocatory Action against a registered demerger deed is also admissible.

This is because the Revocatory Action does not affect the validity of the demerger deed, only its effectiveness vis-à-vis the creditor. In other words, the demerger deed is valid and enforceable against third parties, but not against a creditor who has provided the evidence required under Article 2901 CC.

The European Court of Justice case

Shortly after this case was decided by the Court of Cassation, the Court of Justice ruled on the same issue following a referral for a preliminary ruling on the interpretation of Articles 12 and 19 of Sixth Council Directive 82/891/EEC[1] (“Sixth Directive”), which provide for harmonization of Member States’ laws in order to protect the interests of creditors of companies involved in demergers, while preserving the stability of company operations.

In this case, too, the claim concerned the possibility for creditors of a debtor company to bring a Revocatory Action against it, so as to have the demerger deed declared without effect vis-à-vis them.

With judgment C- 394/2018, issued on January 30, 2020, the ECJ ruled that Articles 12 and 19 of the Sixth Directive do not preclude creditors of the spun-off company, who did not take advantage of the creditors’ protection tools provided in the national legislation, from bringing a Revocatory Action after the demerger has been implemented.

Like the Court of Cassation, the European Court of Justice clarified that the Revocatory Action does not affect the validity of the demerger but merely renders it unenforceable against those creditors.


In conclusion, the judgments at issue make it clear that a debtor company cannot rely upon the absolute and definitive intangibility of its assets solely with regard to the expiration of the 60-day period provided for the opposition of creditors to the demerger deed.

This outcome is appreciated, as it strikes the right balance between the creditors’ need to defend themselves against fraudulent demerger operations (aimed at alleviating debt exposure through the contribution of assets to a new entity) and the stability of corporate demerger operations.

[1] Directive No. 82/891/EEC of December 17, 1982, based on Article 54(3)(g) of the Treaty, concerning the division of public limited liability companies (OJ 1982 L 378, p. 47), as amended by Directive 2007/63/EC of the European Parliament and of the Council of November 13, 2007 (OJ 2007 L 300, p. 47).

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