Even in a record year for Spanish bankruptcies, the filing by Pescanova, a household local name that farms, catches and processes fish, stands out not just for scale, but for the opaque culture and boardroom dysfunction it has revealed.
The April 15 insolvency filing mentions debts of 1.5 billion euros ($2 billion), but financial sources who have had dealings with the company say total debt is probably more than double that amount, potentially making it the country's third-largest bankruptcy.
The court accepted the filing on Thursday and said it would name independent administrators to replace the board.
Regulators and auditors are in particular scrutinizing the actions of its chairman, Manuel Fernandez de Sousa, the son of company founder Jose Fernandez, who built Pescanova from a small business in the Galician port city of Vigo to one of the world's largest fishing firms, with interests from Argentina to Namibia and 10,000 employees worldwide.
Pescanova revealed only on the day of the insolvency filing that Sousa had sold half his 14.4 percent stake in the company in the months leading up to the filing without telling regulators, as required by law.
The stake sale will have raised at least 27 million euros, according to Reuters calculations, a third of which the company said he lent back to Pescanova.
In a regulatory statement announcing the stake sale on April 15, Pescanova said: "Concerned about the group's liquidity and Pescanova's difficulties in financing itself, the chairman decided to offer his own patrimony to the company to resolve urgent liquidity problems."
Pescanova is now being investigated by the stock market regulator for possible market abuse. The company also failed to file accounts on time after falling out with its auditors BDO, who refused to sign off the accounts and were fired this month.
Pescanova declined to comment and denied several requests from Reuters to speak to the chairman or another executive.
BDO sent a letter to Spain's stock market regulator on April 12 to complain that there were no grounds for its dismissal and that it had respected all its obligations.
In the letter it says it repeatedly asked Pescanova for documents and information in the course of its audit that were not provided by the company, which made it impossible to sign off on the accounts.
Part of the problem at Pescanova, whose declared debt is eight times its annual operating profit, is due to mishaps at a turbot farm in Portugal, where thousands of fish died in 2011 and 2012 because of the faulty construction of the hydraulic system, Pescanova revealed on April 15. That caused an estimated 70 million euros of losses.
But its biggest problems arose from the collapse of Spanish savings banks, which triggered the need for European aid and fears that Spain itself would need a full sovereign bailout.
A former high-ranking executive at Pescanova, who said he left the company in disagreement over its management, told Reuters that as Pescanova's only significant shareholders, savings banks Caixa Galicia and Caixa Nova - now absorbed into a nationalized bank - had granted Sousa freedom to act and lent the company cash whenever it had periodic liquidity problems. He spoke on condition of anonymity.
Sousa's loss of access to easy money was not the only consequence of the nationalization of the savings banks, which held as much as 30 percent of Pescanova. The banks were also forced to sell their stakes, which opened the door to new foreign investors and members on a board previously controlled by Sousa's friends and family.
Foreign funds bought into a company that analysts recommended as a reliable generator of profit, with operating margins above 11 percent.
This put close scrutiny on the management of Sousa, whom sources close to the chairman said had been used to acting unilaterally. Three sources who have worked closely with him told Reuters he disregarded input from other executives.
Another source with knowledge of the situation said auditors were kept from visiting various departments and were only allowed to speak to one authorized executive.
When BDO wouldn't approve the financial statements, Pescanova hired KPMG for a detailed analysis of its accounts.
BDO and KPMG declined to comment.
Alexandra Morris, senior portfolio manager at Norwegian mutual fund ODIN, which held 0.68 percent of Pescanova, said she and her colleagues were "outraged" when they heard about the problems BDO had with the company and "managed to sell our stake".
Other shareholders did not manage to.
Trading in Pescanova shares was suspended on March 1 but resumed on March 4 until an indefinite suspension on March 12, when the company said it might have mis-stated debt.
That left investors - including main shareholders Spanish brewery SA Damm, with 6.18 percent, and Luxembourg financial holding company Luxempart, with 5.8 percent - trapped in a stock that has plunged 99 percent since the start of 2012.
Damm has issued a statement criticizing Sousa for hiding his reduced stake in the company while continuing to exercise its full influence. Luxempart did not reply to requests for comment.
Criticism from outside contrasts with employees' deep loyalty to Sousa, who built on his father's work to make Pescanova one of Galicia's top two companies, second only to Inditex, famous worldwide for its Zara fashion chain.
As a major employer in industrial city Vigo, also home to shipyards and a Citroen plant, it is a source of pride for thousands of Galicians who have worked there for generations.
Its main factory sits between a tall hill and the Vigo ria, or bay, making it accessible only by a private road and the port itself, where fish are directly taken from vessels to the plant and made into fish fingers and other products.
Vigo locals buy frozen shrimp, hake and scallops directly from a shop at the plant.
"We can't believe this is happening. The chairman is kind and generous, a hard worker. We're confident this won't all go to waste," said a tearful shop assistant, who has worked for Pescanova for 41 years, starting as a young woman in the factory. She spoke before the court said it was replacing the board. Like a dozen other employees interviewed by Reuters, she did not want to be named.
Whether it all goes to waste will depend on what auditors now find in the wider group's records.
Pescanova has stakes in 89 associated companies across the globe, a web of businesses that complicated oversight. Auditors of the parent company did not have access to the books of affiliates in which Pescanova owned less than 50 percent.
KPMG will now investigate to see if further debt properly attributable to the parent is hidden in any of these affiliates, which would have flattered the apparent financial strength of Pescanova.
Public registries reveal numerous changes in ownership of Pescanova group companies in recent weeks, a strategy that could protect them from falling into receivership. Pescanova announced the sale of two fish farms in Ecuador last week to raise cash to pay down debt and is trying to sell other units.
The insolvency process could now take months or years, ending either in liquidation or a plan to re-float the business.
The group's creditors include Spain's biggest banks as well as state bank restructuring fund FROB, which nationalized the Galician savings banks that lent Pescanova hundreds of millions of euros.
It also owes a long list of suppliers, including chemical firms, fish-feed companies and fishermen.
The securities regulator has warned of sanctions for failure to present audited accounts. A public prosecutor is also probing the firm for insider trading, which could lead to criminal charges.
"We need a law with consequences for directors that put their own companies at risk with their reckless management," said Xabier Vence, spokesman for leftist regional party Bloque Nacionalista Galego.
(Additional reporting by Andres Gonzalez and Tomas Cobos; Editing by Fiona Ortiz and Will Waterman)