**Update – April 22, 2023:** On April 21, 2023, the Bankruptcy Court approved GWG’s further revised Disclosure Statement for its Second Amended Reorganization Plan. The Plan will now be sent to creditors, including L Bondholders, to accept or reject the Plan. For more information, please visit our most recent blog post: What L Bondholders Need to Know About GWG Holdings, Inc.’s Chapter 11 Plan.
**Update – April 13, 2023:** On April 13, 2023, GWG submitted a revised Disclosure Statement for its Second Amended Reorganization Plan that provides creditors with more information about potential recoveries. However, the amount bondholders will recover under the proposed restructuring plan remains extremely uncertain and will likely take multiple years to bear fruit. To read more, check out our latest blog post: GWG Bankruptcy Update (April 17, 2023): Liquidation Options Become Clearer as Recovery for Bondholders Remain Uncertain
As GWG Holdings, Inc. continues to navigate the bankruptcy process, Iorio Altamirano LLP urges L bondholders to contact the firm to evaluate their other legal options to recover their investment losses. Iorio Altamirano LLP represents GWG L Bondholders throughout the country in FINRA arbitration claims against the brokerage firms and financial advisors that recommended and sold the L Bonds to retail investors.
**Update – March 30, 2023:** On March 28, 2023, United States Bankruptcy Judge Marvin Isgur told GWG Holdings, Inc. that it needs to provide bondholders more information about potential recoveries before he approves sending a Disclosure Statement to creditors, which needs to occur before creditors vote to accept or reject the Second Amended Reorganization Plan. However, the judge also cautioned L Bondholders that even with the additional information, the amount that L bondholders are going to recover would likely remain uncertain. The uncertainty on the amount of money that will be available to distribute to L bondholders results from the nature of the remaining assets that GWG has. Outside of the portfolio of life insurance policies that GWG owns, the company does not have liquid tangible assets to sell to raise cash. Instead, its primary assets are its equity interest in Beneficent and its litigation assets, which are legal causes of action against non-parties, including Beneficent. Numerous factors impact how, when, and if GWG can monetize those assets. Additionally, based on information filed through the bankruptcy proceeding, the sale of the portfolio of life insurance policies will not likely result in a significant recovery to L bondholders.
Original Post:
GWG Bankruptcy Update (March 14, 2023): GWG Appears to be Headed Toward Liquidation
In court filings on March 11, 2023, GWG notified the Bankruptcy Court that it would submit a Second Amended Reorganization Plan after concluding a mediation with creditors and other stakeholders, including the Official Committee of Bondholders of GWG Holdings Inc. (“Bondholder Committee”). The latest plan, expected to be filed on or about March 14, 2023, proposes liquidation for GWG through the establishment of two liquidation trusts. The plan will likely be put up for a vote by creditors in the coming months.
Below is a high-level summary of GWG’s Second Amended Reorganization Plan based on recent court filings:
- Under the Second Amended Reorganization Plan, GWG will no longer continue as a going concern.
- Instead, GWG will cease all new business operations.
- A Wind-Down Trust will be established to take all necessary steps to wind down GWG’s business affairs and monetize GWG’s non-litigation assets.
- GWG’s two primary non-litigation assets are its (i) portfolio of life insurance policies; and (ii) passive non-controlling equity interest in The Beneficient Company Group, L.P. (“Ben LP” and, together with its subsidiaries, “Beneficient”) and FOXO Technologies, Inc. (“FOXO”).
- GWG’s Chief Executive Officer and Chief Restricting Officer, Jeffrey S. Stein, or an affiliate of Mr. Stein, will be appointed as the Wind-Down Trustee.
- The Wind-Down Trust will issue trust interests (Series A1, A2, B, C. D, and E) to all holders of claims and equity interests in GWG, including GWG L Bondholders. That is, Bondholders will exchange their current L Bonds for New Series A1Trust interests.
- The term of the Wind-Down Trust will be three (3) years. The term may be extended by court approval for up to two( (2) additional years.
- The second trust, the Litigation Trust, will hold all non-released litigation assets, as well as GG’s interest in any insurance policies covering directors and officers of GWG. The trustee of the Litigation Trust, which the Bondholder Committee will appoint, will have the discretion to prosecute or settle all such claims, with approval by the bankruptcy court in some circumstances. Any proceeds from the Litigation Trust will be distributed to the Wind Down Trust for further distribution to holders of the trust interests.
- Beneficient, its current and former directors and officers (including, without limitation, Bradley K. Heppner, Thomas O. Hicks, Bruce W. Schnitzer, Dennis P. Lockhart, and Peter T. Cangany) do not get released. However, GWG and creditors can still negotiate with Beneficient to reach a settlement. If a settlement is reached prior to the confirmation hearing, the bankruptcy court must approve the settlement.
- GWG will not consent to the Beneficient SPAC transaction without court approval.
- Broker-dealers and investment advisors who sold GWG L Bonds to retail investors may elect to receive a release from the debtors of any causes of action by the estate in exchange for paying the debtors cash in the amount equal to 30% of all value received by such electing broker-dealers from GWG for the sale of GWG L Bonds. Any broker-dealer may opt-in to the broker-dealer settlement by submitting an election notice and making the requisite payment within 90 days following the Second Amended Plan’s effective date.
As GWG Holdings, Inc. continues to navigate the bankruptcy process, with many questions remaining for L bondholders, our law firm remains ready to help GWG L bond investors file meritorious arbitration claims to recover their losses against broker-dealers. We continue to help GWG L Bond investors recover their losses.
To read more about the alleged misconduct, please visit our other blog posts:
Broker-Dealers Sold GWG L Bonds Using Aggressive and Misleading Marketing
“GWG Was a Classic Ponzi Scheme” – Official Committee of Bondholders of GWG Holdings, Inc.
Iorio Altamirano LLP (gwglawyer.com), a law firm that represents retail investors, is representing many GWG L Bond investors against brokerage firms across the country to recover investment losses and damages sustained by those firms’ recommendations to invest in GWG L Bonds. Based on the law firm’s investigation, there appears to have been widespread negligence and misconduct by many brokers and broker-dealers across the country.
For the latest on Iorio Altamirano LLP’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.
About Iorio Altamirano LLP
Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.
We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.
If you have invested in L Bonds offered by GWG Holdings, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (855) 430-4010.