The current economic crisis is showing one of the main problems that many companies in financial distress have to face, namely, the impact of bankruptcy law in relation to companies and firms. This paper aims to analyze the bankruptcy law ex‐ante efficiency when companies are in financial distress. To test it out, two research questions are submitted: (i) Is solvency, the criterion used in the Spanish law, the best one to assess the relative significance of the main indicators, which determine bankrupt firms? (ii) Is the Spanish bankruptcy law efficient according to solvency or are there better criteria? To answer them, a logistic regression model is conducted. The sample embraces 1,387 firms in Spain, the data being obtained from 12 Commercial Justice Courts complemented with financial information. The main conclusion is that the solvency criterion is adequate to classify bankrupt companies although currently Spanish Bankruptcy law is not as efficient as it could be. Additionally, the relevant companies' indicators, which explain the financial distress procedure, are presented. Copyright © 2013 INSOL International and John Wiley & Sons, Ltd