Girona Court Cancels €3.3 Million Debt: A Real Second Chance Law Case

On 28 April 2026, Girona's Commercial Court (Juzgado Mercantil 1 de Girona) issued a ruling permanently cancelling a debt of €3,279,069 owed by a Girona businessman. The discharge order (Exoneración del Pasivo Insatisfecho, EPI) determined that the debtor had acted in good faith and that the accumulation of debt was the result of a "snowball effect" driven by the lending institutions themselves.

The case was handled by lawyer Alejandro Sánchez of Sánchez Ruiz Abogados in Girona, and was covered by the Diari de Girona and the Catalan News Agency (ACN).

The case: a textile company, six banks and €3.3 million in debt

The Girona businessman was the director of a textile company that ran into financial difficulties. In an attempt to keep it afloat, he took out loans from several banks — six in total. Each new loan was intended to cover the previous one, creating what the court itself describes as an "accumulative" dynamic: the interest and commission charges on the loans became a burden that made economic recovery impossible.

The company eventually went bankrupt. The businessman, who had personally guaranteed the loans in his capacity as director, was left with a total debt of €3,279,069 he had no means of repaying.

With lawyer Alejandro Sánchez, he filed for voluntary insolvency before Girona's Commercial Court under the Second Chance Law.

Why the court granted the discharge

The central argument of the defence was the debtor's good faith. Alejandro Sánchez demonstrated that the businessman had taken on the loans with the genuine intention of saving the company, that he had not concealed any assets or diverted any funds, and that the insolvency situation was the result of a financial dynamic that the lenders themselves either knew about or should have known about.

The court agreed with the defence on every point. The ruling states explicitly that it identifies "an accumulative dynamic of debt where the financial burden of interest and commissions becomes progressively unmanageable."

The court also noted that the lending institutions "had access to information to assess the debtor's solvency when granting the loans" and that, despite this, some microloans carried "particularly onerous conditions." This acknowledgement was decisive for the final ruling.

The court dismissed any suggestion of "diversion" of funds or "serious recklessness or intent" in the accumulation of debt. Its conclusion was clear: the insolvency was the result of "a progressive process of financial over-indebtedness that was known or knowable by the lenders themselves," compounded by financing costs and repeated refinancing operations.

The court recognised the businessman's right to permanent discharge of his full debt: €3,279,069.

You can read the full news story published by the Diari de Girona here.

What this ruling means for debtors in Girona

This ruling is significant for several reasons that go beyond the individual case.

Company directors can also use the Second Chance Law. A common misconception is that the Second Chance Law only protects private individuals with personal consumer debts. This case demonstrates that someone who has personally guaranteed business loans can also obtain full discharge of those debts.

Snowball debt from refinancing chains can be cancelled. When debt has grown precisely because new loans were taken out to pay off previous ones — the snowball effect — the court recognises that this dynamic does not imply bad faith on the debtor's part. On the contrary, part of the responsibility falls on the institutions that continued extending credit in circumstances where insolvency was foreseeable.

Girona's Commercial Court applies a debtor-friendly standard. The ruling takes into account the personal and professional context of "anxiety and inability to manage the accumulative effect of debt" and evaluates the situation holistically, not merely as a formal checklist of legal requirements.

Could your case have the same outcome?

Every situation is different. Not all debt cases share the same origin, characteristics or debtor profile. However, this ruling sets a clear precedent: debts that have grown through successive refinancing, loans personally guaranteed by company directors in difficulty, and situations of progressive insolvency all have genuine prospects of discharge.

If you have debts you can no longer manage — with banks, with the Tax Agency, with Social Security or with suppliers — and you believe your situation resembles the one described in this case, the first step is a professional assessment of your circumstances.

At Sánchez Ruiz Abogados we handle Second Chance Law cases in Girona. We assess your situation and give you an honest picture of your realistic prospects for discharge and what the process would involve.

Frequently asked questions

Can I cancel debts if I was the director of a company that went bankrupt?
Yes. The Second Chance Law protects natural persons, including directors who have personally guaranteed business debts. This case is a direct example.

Can bank debts from loan refinancing chains be discharged?
Yes, provided good faith can be demonstrated and the debt accumulation was not the result of fraudulent or reckless conduct. Recent case law from Girona's Commercial Court confirms this.

Can I cancel debts if I owe more than one million euros?
The amount of debt is not a legal threshold for accessing the Second Chance Law. What matters is the existence of genuine insolvency and the good faith requirements.

How long does the process take at Girona's Commercial Court?
Between 6 and 14 months on average, depending on the number of creditors, the volume of documentation and the complexity of the case.