Hi,
My understanding is that you can declare yourself bankrupt or a creditor owed $5,000 or more can file to have you declared bankrupt. If the ATO is a creditor that your friend owed more that $5,000 they may have applied to have your friend declared bankrupt.
It's hard to say without further details, but the best thing to do in this situation is to contact the ATO. I have to assume they have included a contact number for the relevant part of the ATO to contact with regards to the paper work your friend received.