Going bankrupt doesn't necessarily mean going out of business. Also, as another commenter said, "letting a company fail really just means letting it sink far enough that some other acquirer will pick it up."

Great point: In US bankruptcy law, "Chapter 7" is liquidation, and "Chapter 11" is re-org. Often, a well-managed Chapter 11 bankruptcy can allow a company to reduce debt burden and emerge as a stronger company, saving many jobs in the process. Chapter 11 bankruptcy is common in the US airline industry.

Chapter 11 is basically finding a lower bidder - the lenders are willing to take ownership of the failing company.

> How is market competition or the public served by forcing a company to go out of business instead of being acquired

How is market competition or the public served by companies whose only strategy is to fail and be bought by the ever shrinking number of ultra rich mega corporations?