Bank Liability for Improper Credit Decisions in the Civil Law

The number of bankruptcies or corporate reorganisations continues to increase in the aftermath of the recession that marked the early 1990s, while the reorganisation or liquidation of several of the businesses that failed in the 1970s still is underway. Two kinds of actions should clearly be distinguished. On the one hand, there are actions based on an unwarranted or negligent withdrawal of credit by the bank which may have triggered the bankruptcy. On the other hand, third parties have often attempted to have the banks declared liable on the basis that they continued to support the failing company, thus creating an artificial creditworthiness which misled and damaged other creditors. This chapter gives a short overview of the criteria and cases in which such bank liability, more specifically, third party liability for improper credit decisions can attach. It mainly focuses on French and Belgian law, where numerous cases are found, but it also attempts a comparison with Dutch and German law.