“We’re experiencing the greatest psychological recovery in the history of economics for the last six months,” said Stewart Cohen, operating chief of the Gordon Brothers Group. “I don’t know why.”

To be sure, Cohen’s statement would be considered much more prescient had he made it about one month ago. But his experience through the ugly realities of the last 18 months of bankruptcy proceedings provided an obvious lesson of which he was aware well before last month’s “Flash Crash” in equities markets.

However, with the last 30 days of unstable, nearly surreal market activity, Cohen told attendees of the Association for Corporate Growth’s New York discussion on Tuesday, more “amend to extend” loans have surface, seemingly pushing the inevitable off well into the future.

Access to capital remains tight, Cohen said, and middle market private equity firms heaped tens of billions of debt onto companies acquired from the third quarter of 2005 until the same period in 2007—debt that is likely difficult to service, and certainly not cheap.

“I’m not sure they can afford an increase in debt,” he told ACG attendees. “You’re going to see lots of opportunities in the middle market.”

Cohen went on to call the ongoing circumstances in the lending market “a restructuring consultant’s dream” because valuations for bankrupt companies are being assembled hastily, and often well-below the ultimate auction rates of assets. For example, Cohen said, the intellectual property affiliated with bankrupt coat maker London Fog was appraised first at $8 million, but auctioned at $63 million.

Unreliable valuations, while, potentially a doorstop to a big bargain, are still ultimately a hazard, Cohen said. And they are just one of many; he said that looking to work a DIP loan through Florida bankruptcy court, he found local offices overburdened beyond capacity.

“You can’t get in front of a judge in Florida [to commence proceedings] for a month,” he exclaimed.

Financial services industry Restructuring