If I placed a spread bet of £10 a point that the share price of a company goes down and it goes down and then the company declares bankruptcy - What happens with that spread bet?

I'd also be interested what happens if you bet £10 a point that the price goes up and then the company declares bankruptcy.

Somebody must know. I shorted Paragon and will want to cash in soon before its possibly too late.

Please don't take this as gospel, but the way I understand it is that if you short a stock you are borrowing shares from a lender to sell back into the market. The hope obviously is that you will buy the shares back for less than you paid for them later on to return to the lender, hence making a profit. If a company goes bust and is subsequently delisted, the stock therefore is worthless and does not exist for you to buy back ... so you earn the full amount of the transaction and don't have to return anything to the lender.

*** PLEASE DO CHECK THIS THROUGH WITH YOUR CFD ACCOUNT PROVIDER THOUGH!!! ***

I hope this helps?

http://www.fool.com/FoolFAQ/FoolFAQ0033.htm

It always used to be the case, and I imagine it still is, that if you sold short say 1000 shares at £10 each and the company then went bust that a market maker would offer a nominal 1p for all the 1000 shares. This simply enables you to close the bargain and establish the gain for tax purpose. Probably the same with spread bets.