Please consider reading Third Avenue Funds shareholders letter about investing in the distressed assets and investing in this new era.
He details a case for investing in debt instruments of the financially distressed companies. Distressed investing is highly rewarding but you have to consider its fit for your own competence and abilities. Distress investing needs sophistication and expertise in areas of law, accounting and negotiation, or access to talented resources that can provide you with the help needed. Investors need to understand their abilities before buying these issues. In my opinion distressed security investing is best left for those who specialize in it. In such markets where information is scarce, those who are informed will take advantage of those who are not.
Please consider chapter 12 of Seth Klarman's Margin of Safety for a premier on the subject. You can read the whole book as it is a good summary of how an investing process should run.