This word does not mean something good: Several municipalities declared bankruptcy before Detroit did, but their debts were smaller. Stockton, California owed $26 million, while Detroit owes 18-and-a-half billion. "Bankruptcy" means you don't have enough money to pay your debts. It is a formal and legal action. People, companies, and even cities, can declare bankruptcy. It often means that their property will be sold to pay their debts. And they will have a bad credit rating for years.
Now, when you hear the word "bankruptcy," your English will be good enough to know what this News Word means.