I don't see how you could look at an ~11 employee company that made $10M in 2011 and $22M in 2012 selling an iPhone app and consider it a failure. In the world of the App Store I would consider that a huge success.
But I guess after Instagram, any result for any other company short of "selling to Facebook for $1B" is failing. An unfair and unrealistic benchmark, in my opinion.
It's not entirely clear to me that the company is actually going bankrupt. The author of the article seems to imply it, but obviously he's never seen the company's financials.
Still, with 11 employees as of July 2012[1] (and fewer now), even assuming $200k/year salaries, that barely puts a dent into the $22M they made this year. They make an iPhone app, so I can't imagine them having many expenses besides people. The math doesn't really add up to me.
And that failure comes from incredible mismanagement. Blowing tens of millions on office space, parties, and trips to Vegas and NYC, all while building a talented engineering and design team that was then given no focused direction and subsequently laid off is what led to Hipstamatic's downfall.
But I guess after Instagram, any result for any other company short of "selling to Facebook for $1B" is failing. An unfair and unrealistic benchmark, in my opinion.