When an Asset is in major financial difficulty, we say it is a distressed asset.
For example, if a debt is in danger of default then it is distressed. This is also true usually when the debt is either in default or close to default. Distressed assets lose value. Distressed assets can be a good opportunity to buy if the investor believes the difficulties can be overcome.
Distressed Asset is a term mainly used to refer to intangible assets (also known as financial assets) that are in a sorry financial state. Other examples of such assets include Shares and Bonds.