No, you won't be penalized for failure to take a distribution (RMD) if there isn't anything to distribute.
To prove that, however, the IRA custodian needs to report the FMV of the account ($ 0?) on Form 5498; this is the same form that reports the RMD amount.
The information on Form 5498 is submitted to the IRS by the trustee or issuer of your individual retirement arrangement (IRA) to report contributions, including any catch-up contributions, required minimum distributions (RMDs), and the fair market value (FMV) of the account.
As I understand the situation, the investment is frozen as it is now in bankruptcy court. All the paperwork I have (mailed & online statements) shows the investment still has value. However, IAW the court proceedings for bankruptcy, none of the investors can take distributions or cash out their accounts. In addition, 98% of the investors have agreed to a 24-month forbearance period during which we cannot take distributions. Can I use the agreement as an attachment to Form 5329 in order to avoid a penalty?
Yes, you can use the agreement as an attachment to Form 5329.