The reason for bankruptcy is that an enterprise as a legal person can't pay off its debts due, and if its assets are insufficient to pay off all its debts or it is obviously insolvent, it can pay off its debts.
Legal basis: Article 7 of the Enterprise Bankruptcy Law of the People's Republic of China. The debtor may apply to the people's court for reorganization, reconciliation or bankruptcy liquidation under the circumstances specified in Article 2 of this Law. If the debtor is unable to pay off the debts due, the creditor may apply to the people's court for reorganization or bankruptcy liquidation of the debtor. If an enterprise as a legal person has been dissolved but has not been liquidated or its assets are insufficient to pay off its debts, the person liable for liquidation according to law shall apply to the people's court for bankruptcy liquidation.