I would inform the bank about the status and see if they require a clear termite at this stage.
The buyers would get a warranty after the treatment and I would suggest they keep up the termite insurance and close. OR if they decide they do not want to close
The only loss to your buyers ,as I see it, is their deposit if the Sellers want to be technical, but now the listing agent will have to disclose recent termite activity and treatment to the future buyers.
Dp2, what company are you with? It's not coming up on your pic/profile.