Old king of Spain left in debt-ridden state (8)
I believe the answer is:
ethelred
'old king' is the definition.
(as in thelred the Unready, medieval king)
I cannot understand how the rest of the clue works.
(Other definitions for ethelred that I've seen before include "Early English king" , "Baleen used to stiffen corsets, etc" , "King nicknamed the Unready" , "Old king" , "English king between nine hundred and seventy-eight and ten hundred and sixteen" .)