I was published by a small (but for a time respected) press, which is currently in crash-and-burn status. Victoria Strauss has written several posts about them. I signed with them using a literary attorney, as I was unagented. (I know, I know, but there was a contest, and I was querying agents at the time) Anyway, I managed to get my rights back to my books, and am moving on.
As I prepare to query a new, unrelated ms, I am at a loss as to whether I should mention this prior publishing experience. It's my only writing credit, but it's not particularly impressive, given what's happening. I would be grateful for any insight into what I should do.
A publisher's implosion doesn't reflect on you. If this is your only previous publishing credit, it's worth saying something like "my debut novel was published by Asbestos Underpants LLC, which is now doing a spot on impression of a five alarm fire."
Most of us pay attention to Victoria's blog posts about publisher woes. A lot of the agents you query might very well have clients in the same pickle.
I have a lot of sympathy for writers going through these kinds of experiences. I tend to read their queries more carefully for just that reason.
Far from leaving it out, it will help you to include it.