I wonder if this is just a way to ensure the debt is still owed, not so they can 'be made whole' for what they are owed, but so they can consider it bad debt

Without this clause, the debt would probably be unilaterally dis-chargeable (and it still might considering these are extraordinary circumstances), but if the clause were to hold scrutiny, it would mean the debt could be classed as 'bad debt' and sold off to other parties so they could try and collect. It would be for much less than it was originally worth, but it would mean the lender could still recoup some of their initial investment

Bad debt can also be written off as a loss for tax purposes, which could also be the driving motivator