Criminal Investigations and the Termination of Credit Facilities

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Brussels Court of Appeal (Dutch-speaking chamber), 27 January 2026

Can a bank terminate a credit relationship when its client has not yet been convicted of any criminal offence?

The Brussels Court of Appeal (Dutch-speaking chamber) recently shed useful light on this question in a judgment of 27 January 2026.

The decision arises in a setting financial institutions encounter regularly: the combination of criminal-law exposure, operational incidents and a gradual erosion of the relationship of trust.

The facts

In the case before the Court:

• a judicial criminal investigation was pending against the client company and/or its directors;

• certain accounts had been frozen;

• the company was experiencing repayment difficulties;

• the explanations provided to the bank were not considered convincing.

Against that background, the bank decided to terminate the credit facilities.

The company’s director, who had also committed himself as guarantor, challenged that decision, arguing in particular that the bank had abused its rights through a sudden and improper termination.

The legal issue

The dispute essentially came down to a single question:

Can a bank terminate a credit facility on the basis of criminal-law exposure, before any conviction, without abusing its rights?

The Court’s answer is nuanced but clear: yes, subject to conditions.

The role of the contractual framework

A central element of the Court’s reasoning is the existence of contractual clauses allowing termination in the event of criminal proceedings or of events liable to affect the client’s solvency or reputation.

The decision implicitly restates a principle that is well established in banking practice:

the legal robustness of a termination decision rests first and foremost on the quality of the contractual documentation.

Where the credit agreements or general terms and conditions expressly provide for this type of situation, the bank’s margin of appreciation is significantly strengthened.

The standard of the prudent and reasonable banker

As is often the case with credit terminations, the analysis does not stop at the contractual framework.

The Court also examines whether the bank acted as a prudent and reasonable creditor. [link to: https://bankinglaw.be/bank-liability-when-granting-credit-10-key-principles-of-belgian-banking-law/%5D

In the case at hand, several converging elements were taken into account:

• the existence of a judicial criminal investigation;

• the freezing of accounts;

• repayment incidents;

• the absence of satisfactory clarification;

• the deterioration of the climate of trust.

The decision therefore rested on a set of objectively verifiable indicators, which led the Court to rule out any abuse of rights.

AML risk management was also part of the equation.

Credit as a relationship of trust

The decision recalls a central reality of banking practice: credit is not merely a financial relationship; it is first and foremost a relationship of trust.

Where that trust is objectively shaken — for criminal, financial or operational reasons — the bank may legitimately reassess its exposure.

The fact that termination may contribute to worsening the position of the debtor or the guarantor is not, in itself, decisive. What matters is the banking relationship of trust.

Criminal risk, reputational risk and credit risk

The judgment confirms a shift already visible in practice: criminal-law and reputational risks are no longer peripheral considerations; they are now fully part of credit risk analysis.

For financial institutions, this implies in particular:

• heightened vigilance where investigations or judicial proceedings are pending;

• precise documentation of warning signals;

• traceability of exchanges with the client;

• adequate reasoning underpinning the decisions taken.

A question of timing rather than of principle

In practice, these cases are rarely decided at the moment of termination itself.

The strength of the bank’s position often depends on:

• the early identification of weak signals;

• the quality of relationship monitoring;

• the documentary preparation of the file.

Waiting for a final criminal conviction may, in some situations, mean acting too late, once the economic situation has already deteriorated.

Takeaways for banking practice

The decision yields several concrete lessons:

1. The contract remains the primary risk-management tool — Clauses dealing with criminal proceedings or breaches of trust must be precise and workable.

2. Termination must rest on objectively verifiable elements — A set of converging indicators will always be more robust than a single, isolated ground.

3. Documentation is decisive if the decision is challenged — Letters, reminders, exchanges and internal analyses play a central role before the courts.

4. Managing criminal-law risk is now an integral part of credit risk — Both from a prudential and from a reputational standpoint.

Conclusion

The judgment of the Brussels Court of Appeal confirms that a bank may, in certain circumstances, terminate credit facilities before any criminal conviction, without abusing its rights.

That option is only secure, however, where two conditions are met:

• an adequate contractual framework;

• conduct consistent with the standard of the prudent and reasonable creditor.

Beyond the specifics of the case, the decision illustrates an operational reality familiar to financial institutions: managing credit risk sometimes means acting early, on the basis of imperfect information, in order to avoid an irreversible deterioration of the bank’s position.

=> See also our analyses on bank liability and AML risk management. [insert links once bankinglaw.be structure is live]

This article is a translation. Only the French version is authoritative. It is provided for information purposes and does not constitute legal advice.