If a company goes bankrupt what happens on a spreadbetting site?

Let's say you were short on them and then the company goes bankrupt and leaves the stock market.

My SB firm's T&C say they say they reserve the right if an underlying company ceases to be traded for more than 4 business days on the stock market to close open trades at the last price available before suspension.

On the other hand, if you were long on that company, they also say in guidance that if the company was to go bust and its share price plummeted to 0p overnight, you would still be liable to the full cost of the trade.

Happened to me last week with ACI. Was short and they filed for ch 11. A number of things happened

1. Trading was halted for the full day that they announced

2. Trading moved onto the OTC markets (pink sheets) with a new trading ticker.

3. Couldn't deal on the online platform, had to ring up my spreadbetting firm directly.

4. Covered via that phone call

5. Got destroyed on the spread.
They claimed the price they had were getting was $0.2920 per share and they could cover for me for $0.3020 to include their spread. I don't believe for a minute the share price was that high, I was looking at an online quote which was coming in around $0.20 at the time. As I didn't have direct market access I couldn't really argue much with them, it was really take it or leave it.

Not the end of the world in the big picture of things, I was short since $4.00 so I was just keen to cover and take my profits.

Good question. These things can happen and the risk needs to be recognised to at least avoid psychological unpleasant shocks.

I only trade forex these days. Maybe forex is looking less risky now? - a currency pair can't go bankrupt.