Madrid, February 20, 2026 – Spain’s Supreme Court has issued a ruling against banks for practices that hinder companies undergoing insolvency proceedings, potentially opening the door for increased financial liability for lenders. The decision centers on the unilateral withdrawal of credit lines to businesses already in financial distress.
The court determined that financial institutions must compensate companies if they cut off credit without justification during insolvency proceedings, effectively “robbing” them of the opportunity to survive. This applies even when existing contractual agreements are in place. The ruling utilizes the legal doctrine of “loss of opportunity” to counter the banks’ defenses.
The Supreme Court’s decision represents a setback for risk departments within banks, which often move to restrict funding – particularly lines of credit for commercial paper – as soon as a client initiates insolvency proceedings to limit their exposure. The court’s stance is particularly relevant given the current economic climate and the challenges faced by small and medium-sized enterprises navigating financial difficulties.
Previously, banks successfully argued that a company’s pre-existing critical financial situation – including insolvency, debt, declining sales, or increased competition – made closure inevitable regardless of financing. The Supreme Court has now rejected this argument, establishing that breaching prior contractual commitments creates direct financial responsibility.
According to Forbes, the court also clarified that the inability to offset debts after a bankruptcy declaration applies even if stipulated in the contract between the bank and the company. This builds on previous rulings (46/2013, 428/2014, 170/2021 and 315/2021) protecting assets in bankruptcy proceedings from automatic bank offsets.
The ruling, announced on February 20, 2026, follows a case involving a company in the remanufacturing of ink cartridges, as reported by Investing.com. Navas & Cusí, a law firm, estimates that approximately 25% of SME bankruptcies involve disputes over bank compensation, leading to about 10% of related legal incidents.
The Supreme Court’s decision, initially reported by Expansión, signals a heightened level of scrutiny regarding bank behavior during corporate crises and could lead to a wave of similar claims.
