A wipe out happens when enemies in battle managed to knock out all party Denpa Men (or other means, including accepting the Grand King's offer in The Denpa Men: They Came By Wave).
This will cause the Denpa Men (except the hero, Crystal, Jasper, Amber, Mary and Rick) in the party to return to their territory , all equipment and clothes will be removed, and any effects from fruit that that been put on those Denpa Men will be removed as well along with paint.