It is not true that market failure occurs when a company goes bankrupt.

One mechanism to make the allocation of resources efficient in a marketplace is that companies that do a bad job meeting demand suffer losses. Companies that have been successful for decades can be rendered obsolete by what economists call "creative destruction" which refers to the process by which a market removes suppliers which no longer provide the public a clear benefit. For example, if a company that sells rotary phones finds they cannot sell phones anymore, it is not a market failure when they close down or go bankrupt as customers move to cellular phones.