Colleen,
Honesty is the best policy in this one. I would just say it was financially unstable where you currently are employed and need to have a stable company to work in, nothing wrong in that answer I think.
I could be wrong but that's what I've used in the past.
How much time do you have to hear stories I could tell ya about bad business deals.
My last employer had nightmare issues going on that I wasn't aware of until well after I left. Such as, the President of the company was no longer acting in that facility, just in title only. When your Accountant leaves honey its time to jump ship and QUICK! We had other issues like misuse of employees 401(k) funds of which the SEC was going after the person funding the company at the time and he eventually killed himself over it. Sad sad story. But true. Fortunately, the company survived, it has been sold under new ownership. Apparently two brothers with lots of time and money on their hands have brought it back to where it was before I started. I work right next door to the company I left an fortunately I still see cars in the parking lot (not as many) during the busy season which is Spring, Summer and Fall around here (wintertime construction isn't so busy for kitchens and baths).
Sooo, the thing you have to remember is it ISN'T your faul that the company isn't doing so well and they need to hear the real reason they are closing and that it had nothing to do with your performance. Companies will understand that. My current employer did and didn't hesitate to hire me cause they knew I needed a company that had more stable footing that I was currently in. Five years later I'm still here and yes we've had layoffs here this year as well.
Hang in there, it can only get better. Time to move onwards and upwards I say.
Good luck and let us know what happens.
Chris68
Deskdemon Forum Board Staff 
