Securities Arbitration Lawyer Blog
**Update: March 14, 2025** Over the past week, the GWG Litigation Trustee has reached agreements with additional defendants to resolve various matters, all of which are subject to court approval. In addition to the previously reported conditional agreement to settle claims with Beneficient and Brad Heppner for $50.5 million and the settlement with Whitley Penn for $8.5 million (both detailed in our original post below), the Trustee has also secured settlements with Jon R. Sabes, Steven F. Sabes, and their affiliated trusts and entities for $2.3 million, as well as with the law firm Mayer Brown LLP for $30 million. Collectively, the settlements total approximately $91.3 million, or about 5.6% of the $1.6 billion of GWG L Bonds that were outstanding when GWG filed for bankruptcy in April 2022. The following is a summary of the settlements to date:
| Defendants | Allegations | Settlement Amount |
| Brad Heppner and Beneficient (and affiliated trusts and entities) | The complaint filed on April 19, 2024, alleges that GWG Holdings, Inc. and its affiliates engaged in a fraudulent scheme involving the sale of $1.6 billion in L Bonds, misleading investors about the company’s financial health and the safety of the investments. It claims that the defendants concealed critical information, misrepresented the use of proceeds, and operated a Ponzi-like structure, ultimately harming thousands of investors when the company collapsed into bankruptcy in 2022.
|
$50.5 million |
| Whitley Penn LLP | The allegations against Whitley Penn LLP, GWG Holdings, Inc.’s auditor, include that the company failed to detect and report financial irregularities, contributing to GWG’s fraudulent scheme and subsequent bankruptcy. Whiteley Penn’s actions or inactions allegedly harmed investors.
|
$8.5 million |
| Mayer Brown LLP | The allegations against Mayer Brown LLP include that the law firm, as counsel to GWG Holdings, Inc. before and after its bankruptcy filing, provided deficient legal advice and engaged in conflicts of interest, contributing to the company’s fraudulent activities and eventual bankruptcy. Pre-bankruptcy allegations include that the law firm aided and abetted GWG fiduciaries’ breaches of their fiduciary duties in certain transactions.
|
$30 million |
| Jon R. Sabes, Steven F. Sabes, and their affiliated trusts and entities | The complaint filed on April 19, 2024, alleges that Jon Sabes, Steven Sabes, and related companies engaged in breaches of fiduciary duty and fraudulent conduct as officers, directors, or affiliates of GWG Holdings, Inc., contributing to its financial collapse and bankruptcy in 2022.
|
$2.3 million |
Original Post:
In a significant development for GWG Holdings, Inc. L Bond investors, a $50.5 million settlement agreement was announced on March 7, 2025, aimed at resolving long-standing litigation tied to the company’s bankruptcy. At Iorio Altamirano LLP, we’ve been at the forefront of advocating for GWG L Bond investors, having already recovered over $3 million for our clients. This proposed settlement with certain defendants, including Beneficient and Brad Heppner, could impact thousands of investors who suffered losses when GWG filed for Chapter 11 bankruptcy in April 2022. Here’s what you need to know about the settlement, its implications, and how our firm can help you navigate this complex process.
Key Takeaways from the GWG L Bond Settlement
- Settlement Amount: $50.5 million to be paid by Defendants’ insurers, pending court approval.
- Litigation Resolved: Covers both a class action securities lawsuit and a bankruptcy adversary proceeding. The settlement resolves claims for investors who purchased GWG L Bonds between June 3, 2020, and April 16, 2021.
- Distribution: Funds will be allocated to holders of Allowed Claims in GWG’s bankruptcy case, with an estimated $31.48 per $1,000 Unit of L Bonds before deductions. That’s a little over three cents for every dollar invested.
- Opt-Out Contingency: The settlement could be terminated if too many investors opt out, with specific deadlines in place.
- Bar Order Hearing: A hearing to finalize a bar order protecting settling Defendants is scheduled for April 16, 2025.
- Next Steps for Investors: The best avenue of recovery for most GWG L Bond investors remains filing securities arbitration claims against the brokerage firm that sold these risky and speculative securities. Contact our law firm today for a free and no-obligation consultation.
- Settlement with Whitley Penn: Separately, the GWG Litigation Trustee is seeking approval to settle claims with the accounting firm Whitley Penn for $8.5 million.
Understanding the GWG Holdings Settlement
Background: GWG’s Financial Collapse
GWG Holdings, Inc., a Dallas-based financial services company, marketed L Bonds as a high-yield investment tied to life insurance policies. However, the company faced mounting debt—over $1.3 billion in L Bonds—and regulatory scrutiny, culminating in its Chapter 11 bankruptcy filing on April 20, 2022. This left thousands of investors, many of whom were retirees or conservative savers, with significant losses.
Since then, litigation has unfolded to recover funds for affected investors. The recent settlement marks a pivotal step in this process, addressing claims from both a securities class action (Case No. 3:22-cv-00410-B) and a bankruptcy adversary proceeding (Adv. Pro. No. 24-03090).
Settlement Details
Announced on March 7, 2025, the $50.5 million settlement involves Lead Plaintiff Frank Moore, GWG Litigation Trustee Michael Goldberg, and Defendants, including Brad Heppner and Beneficient entities. Key points include:
- Funding: The settlement is financed entirely by the Defendants’ insurers, with proceeds forming a Settlement Fund plus interest.
- Scope: It resolves claims for investors who purchased GWG L Bonds between June 3, 2020, and April 16, 2021, alleging securities law violations due to misleading statements in GWG’s Registration Statement.
- Distribution Process: After deductions for taxes, administration costs, and attorneys’ fees (up to $8.48 million for Class Counsel and 35% for Trust Counsel), the net fund will be distributed through GWG’s bankruptcy plan. Investors with Allowed Claims can expect an average of $31.48 per $1,000 Unit of L Bonds, though this is before deductions.
The settlement requires approval from both the U.S. District Court for the Northern District of Texas and the U.S. Bankruptcy Court for the Southern District of Texas. Notices will be sent to eligible investors with options to participate, object, or opt out.
Opt-Out Contingency: A Critical Clause
A supplemental agreement, also dated March 6, 2025, introduces an opt-out threshold. If too many class members exclude themselves, the Defendants can terminate the settlement. This contingency underscores the importance of understanding your rights:
- Deadlines: Opt-out requests must be tracked, with Defendants notified 14 days before the Settlement Hearing and a termination decision due 3 days prior.
- Flexibility: Investors can retract opt-outs, potentially preserving the settlement if the threshold is met post-withdrawal.
This clause adds uncertainty, making legal guidance essential for investors deciding their next steps.
Bar Order Motion: Ensuring Finality
On March 7, 2025, a motion was filed to secure a bar order, preventing third parties from pursuing GWG-related claims against settling Defendants. This protects the Defendants in exchange for committing nearly all D&O insurance proceeds to the settlement. A hearing is scheduled for April 16, 2025, at 2:30 p.m. in Houston, Texas, with notice provided via the GWG Trust website and other channels.
What This Means for GWG L Bond Investors
Limited Recovery Potential
While $50.5 million is a substantial sum, it pales in comparison to GWG’s $1.3 billion L Bond debt. The estimated $31.48 per $1,000 Unit recovery—before fees and costs—suggests a modest return for investors. For those with significant holdings, this may not fully offset losses, highlighting the need for personalized legal strategies.
Next Steps for Investors
- Review Your Eligibility: Confirm if you hold an Allowed Claim under GWG’s bankruptcy plan.
- Evaluate Options: Decide whether to participate, opt out, or object to the settlement, keeping opt-out deadlines in mind.
- Seek Legal Advice: The complexity of this settlement, coupled with the opt-out contingency and bar order, requires expert guidance to maximize recovery.
How Iorio Altamirano LLP Can Help
At Iorio Altamirano LLP, we’ve recovered over $3 million for GWG L Bond investors through diligent advocacy and strategic litigation against broker-dealers and registered investment advisory firms that sold the GWG L Bonds to retail investors.
With the recovery to investors through the GWG Litigation Trustee’s efforts are likely to be nominal (in this case, a little over three cents for each dollar invested into GWG L Bonds), we continue to believe that GWG L Bonds investors’ best avenue for potential recovery of losses is to file a separate FINRA arbitration claim against their brokerage firms.
Our experience positions us uniquely to assist you in this settlement process:
- Case Evaluation: We’ll assess your potential claims, explain your options, and guide you through the arbitration process.
- Maximizing Recovery: Beyond this settlement, we explore additional avenues to recover losses, including claims against brokers or advisors who recommended GWG L Bonds.
- Proven Results: Our track record speaks for itself—our clients trust us to fight for their financial recovery. We know as much about what happened with GWG Holdings, Inc. and how brokerage firms sold the risky and speculative GWG L Bonds as anyone.
Stay Informed: Key Dates and Resources
- March 6, 2025: Settlement and opt-out contingency agreements signed.
- April 16, 2025: Bar order hearing in Houston, Texas.
- GWG Trust Website: Visit gwgholdingstrust.com/litigation-trust/ for updates.
- Court Filings: Access documents via the Northern District of Texas (Case No. 3:22-cv-00410-B) and Southern District of Texas Bankruptcy Court (Case No. 22-90032).
Contact Iorio Altamirano LLP Today
Iorio Altamirano LLP is a securities arbitration law firm in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.
Iorio Altamirano LLP was at the forefront of the investigation into the GWG L Bonds starting in late 2021 and has already helped investors recover over $3 million in losses.
Don’t leave your recovery to chance—contact Iorio Altamirano LLP for a free consultation. Call us toll-free at (855) 430-4010 or click the below link to discuss how we can help you secure the compensation you deserve.