Well that would totally do it. High failure rate on a low margin product is nearly as bad as having too much inventory because the effect is very much the same. Example:

Say you make $10 profit on a $100 product. For every replacement product, you need to sell 9 more to make your money back on the 1 failure. So, a 10% failure rate means you are basically selling the other 90% just to break even and try to stay in business.

I don't know about OCZ's margins or their failure rate, but with prices squeezing downward, I'd imagine they found themselves in a situation where they maybe had a high enough margin initially that the failure rate wasn't high enough to sink them or the failures didn't occur early enough to burn through the overall margin right away. That's not a sustainable business and the only option is to get people to float you a loan that is maybe big enough to buy time to fix the quality problems if possible. In the event that it's unfixable, no amount of money can save an upside down business model.