It gets resolved by a loss of purchasing power of the fiat money. The answer is the devaluation or replacement of the currency.

The problem of too much debt hasn’t gone anywhere. It’s just sitting out there, waiting for all this new money to gain traction. But when that happens, at some point lending becomes very dangerous at anything approaching current interest rates. Default risk may recede, but inflation risk can be equally damaging to lenders. So now, those mountains of debt are still present, just with rapidly rising interest rates. How does that get resolved?

You are leaving the potential of getting wiped out because the purchase is not profitable and the leverage forces liquidation or bankruptcy of the PE fund. Unless the government is going to guarantee a profit the scheme will be far too risky for many and has the potential of making a bad situation worse. Of course, if the government guarantees a profit the PE fund can make a profit and do well but that does not guarantee economic salvation because of the potential of massive price inflation in the commodity sector that would accompany any real recovery. The recent price collapse has taken a lot of supply off line and has delayed or cancelled many projects. Both trends would take some time to reverse and that would mean massive price inflation that will threaten any recovery.