As mergers and acquisitions activity reaches record lows amid tight credit conditions and a weak economy,  there appears to be one bright spot for dealmakers: the bad economy is pushing companies into bankruptcy, and those companies are being forced into deals.

The number of bankruptcy-related M&A reached a record 34 deals in March, the highest such monthly statistic since August 2004, when there were 38 bankruptcy-related deals, according to Thomson Reuters data.

Thank goodness for the distressed.

Disclosed deal volume for the same period is at a low — $698 million for March, compared with $2.2 billion for August 2004, when the number of deals was comparable.  But only 11 of the bankruptcy-related deals in March disclosed their value, leaving it unclear if distressed valuations are lower now.

Deutsche Bank’s new head of the Americas of rmergers and acquisitions told Reuters that distressed companies would be one of the driving factors for deals in 2009, as overall M&A activity remains subdued.

The activity in March was driven by Deloitte & Touche’s acquisition of bankrupt BearingPoint’s Public Services practice. MI Developments’s purchase of some assets from bankrupt Magna Entertainment, and Gibraltar Life Insurance’s acquisition of bankrupt Yamato Life Insurance Co.

There were 16 such deals in Jan and 13 in February.  In March of last year, there were 20 such deals.