UPDATE 2-Judge puts Martinsa Fadesa into administration

(Adds Martinsa statement, more details from court ruling)

By Sarah Morris

MADRID, July 24 (Reuters) - A Spanish judge put Martinsa Fadesa (MFAD.MC: Quote, Profile, Research) into administration on Thursday, the largest insolvency case in Spain's history, saying the property firm was facing "stagnation, if not recession" in the housing market.

Martinsa asked to be put into administration last week after failing to raise 150 million euros ($235 million), which was a condition for a 4 billion-euro debt restructuring agreed in May.

"(The board will work) to find a quick solution to the administration and reach an early agreement with the creditors in a reasonable time frame," Martinsa said in a statement.

Martinsa is the biggest of a number of construction and property companies that have gone into administration this year as once rampant Spanish house sales slow sharply, sucking away the cash flow developers needed to pay back debt.

"(Martinsa) is in a state of imminent insolvency," the commercial court in the northern town of La Coruna said.

It added that Martinsa had experienced a "drastic reduction in business" as Spain suddenly found itself with a surplus of houses and banks started reining in loans in the wake of the global credit crunch.

The judge said Fadesa's current liabilities totalled 5.2 billion euros but that its cash flow, funds and liquidity were not enough to meet its obligations without it selling some of its 10.8 billion euros of assets.