Short answer. No. Property held by an insolvent debtor as a trustee is excluded from insolvency proceedings under the Civil Code. The money was never legally his to begin with, so his creditors cannot reach it — it belongs to you, the beneficiary of the trust.
What the law says
Property held by the insolvent debtor as a trustee of an express or implied trust, shall be excluded from the insolvency proceedings.
Civil Code, Article 2240 — Trust Property Is Not the Debtor's. Read the full provision →
The rule: trust property does not belong to the debtor
Article 2240 of the Civil Code states plainly that property held by the insolvent debtor as a trustee of an express or implied trust, shall be excluded from the insolvency proceedings. The reasoning is straightforward: insolvency proceedings distribute a debtor's assets among his creditors. Property held in trust was never the debtor's asset to begin with — it is the beneficiary's. Allowing creditors to reach it would mean satisfying one person's debts with another person's money, which the law does not permit.
Express trusts and implied trusts both qualify
The protection applies to both express trusts and implied trusts. An express trust is one deliberately created — by a written agreement, a deed, or a testamentary disposition — where both parties understand that the holder manages the property for someone else's benefit. An implied trust arises by operation of law from the circumstances, even without a formal document. If a debtor received money specifically to hold or use for your benefit, a trust relationship may exist even if you never called it that. The key question is whether, in substance, the funds were his to own or merely his to manage.
What you need to establish your claim
The exclusion is not automatic in the sense that you simply wait. You will typically need to intervene in the insolvency proceeding and assert your claim before the court or the liquidator. You must show that the money or property in question was held in trust — not that it was a loan, a debt, or ordinary business income the debtor earned and kept for himself. A loan creates a creditor-debtor relationship; a trust creates a different one. If the arrangement was a trust, you stand outside the insolvency estate as a beneficial owner, not as one creditor among many.
Why this matters in practice
Many people discover too late that they treated what should have been a trust as a simple debt. If you handed money to someone to manage, invest, or pass on — for example, to hold for a relative, to pay a contractor on your behalf, or to administer an estate — and that person becomes insolvent, whether that money is recoverable in full depends heavily on whether a trust can be established. Creditors of an insolvent debtor often receive only a fraction of what they are owed. A beneficiary of a valid trust, by contrast, is not competing with creditors at all.