Depends on the cause of failure. When long hair became fashionable in the 60's a lot of barber ships closed down, but the demand never hit zero. A company in that situation with 100 locations might scale down to 10 locations without ever losing money as the industry collapsed and consolidated.

I am not saying a company should continue past profitability, but huge amounts of debt shift the line and kill off many salvageable companies while destroying a great deal of wealth.