Why won't the bank pay out a matured certificate that has a loan against it?

Once you take a loan or overdraft against a certificate, the certificate is pledged. The Central Bank's template for certificates states that a pledged certificate stays held, even after its maturity date, until the loan is fully repaid. So not paying out the certificate at maturity follows the rule.

What differs from bank to bank, and what to ask specifically:

What was done with the amount at maturity: renewed into a new certificate, or placed in a held account?

Does it earn a return while held, and at what rate?

Can the loan be repaid from the certificate money itself?

When exactly is the hold lifted after the last instalment?

The answers are in the certificate's terms and the loan contract. Before borrowing against any certificate, read the borrowing and auto-renewal items in its key-facts statement, so you are clear on the outcome if maturity comes before the last instalment.