The most common and most likely answer to this crossword clue is the 2 plus 5 letter word GO BROKE
I've seen this crossword clue in The Guardian
G
O
B
R
O
K
E
Buddy explains!
The straight part
We know that "lose their shirts" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case lose their shirts = go broke.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.