Not always! Typically, companies go bankrupt due to overestimation of their strengths and capabilities, failure to invest, an erroneous business plan at the initial stages, or mistakes made during business expansion.
But there are also many reasons beyond the entrepreneur’s control: a pandemic, global economic crises, natural disasters, etc. All that is commonly called “force majeure”.
There is no direct relationship between the liquidity of property and the causes of bankruptcy.
Undoubtedly, you should not buy anything with your eyes closed. As a buyer, you have the right to come to inspect the property and engage independent experts to assess the property – its condition and value. The debtor’s property put up for auction may be a quality asset suitable for running a business.
I can say with confidence that almost only at bankruptcy auctions there is an opportunity to purchase a very promising and high-quality asset below its market value.