Yeah, from that definition of bankruptcy it's a poor choice of words, because sovereign countries can't go bankrupt in the sense that bankruptcy law means. They're colloquially bankrupt in the sense of "not able to pay their bills", but not legally in the sense of "in court-supervised receivership"--- because there is no world government, and therefore no bankruptcy court with jurisdiction.

Interesting idea though for a small country like Tuvavlu - just sell the country to the highest bidder. If say an online gambling company wants to be sure of favorable treatment it could just buy the government wholesale instead of having to buy it one politician at a time.

It's only what say Lichtenstein, the channel islands, Bermuda have de-facto done.