Agreed. Though, as a pedantic argument, I'd say it's evidence of a poorly organized company, but if a company is badly organized "a few days from utter collapse" can typically be the same thing, especially given it's size.

Downsizing is typically the best way to save a poorly organized company because a smaller company can better adapt to structural re-organization than a larger one can.

If you can bulldoze the structural failures out of the way of the productive people, you'll get a chance to recover.