Micro and small enterprises (MSEs) development is proven strategy across the globe against poverty. Despite this, enterprise failure continued as the pressing problem in context. The transition from agriculture to industry led economy could face some serious challenges in Ethiopia, where there emerges increased collapse of MSEs. The importance of formal studies is hence evident in several ways. However, inclination of previous researches on measuring and prioritizing MSEs’ survival factors narrowed holistic and qualitative understanding of the phenomenon. This study contributes to ease present limitation through describing experiences of unsuccessful MSE cooperatives at Bahir Dar city administration. Constructivist grounded theory approach have been used by this qualitative research. Theoretical sampling, in-depth interview and observation were applied to collect primary data using audio recorder and hand notes. Transcribing, coding, theoretical saturation, testing and validation were undertaken as part of the cyclic data analysis procedure. As result, 5 distinct phases are identified as pre-formation, formal formation, operation, pre- collapse, collapse and post-collapse; presenting the lifecycle of failed cooperatives. In addition one hundred-thirty facets are discussed in conceptual affiliation to 6 major and 5 core categories developed by the study. As conclusion, descriptive theoretical statements are generated explaining experiences of collapsed cooperatives. The study underlines that issues to MSE cooperative failure evolve throughout all phases where some concerns at early stage pass in to the next, accumulate with emerging challenges and result in group deformation. Key words: Constructivist grounded theory, MSE-cooperative, pre-establishment, formation,