When valuing a distressed company's going-concern equity for recovery purposes, why might you NOT use the current depressed trading multiple?

Current distressed multiples reflect the over-levered, financially-stressed entity and a forced-seller/illiquidity discount, not the operating business post-restructuring. For recovery/reorg valuation you value the deleveraged, normalized business—using normalized EBITDA/cash flows and multiples from healthy comparable companies, or a DCF on a sustainable capital structure. The capital structure problem (too much debt) is distinct from the operating value, so you strip out the distress to estimate true going-concern enterprise value.