GWG Holdings Inc Files for Bankruptcy

GWG Holdings, Inc. has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas on April 20, 2022. Due to the Chapter 11 bankruptcy filing, the payment obligations for the GWG L Bonds are stayed, which means that GWG L Bond investors will not receive any principal or interest payments until GWG Holdings, Inc. restructures its debt obligations and the court approves the distributions. There is close to $2 billion in GWG L Bonds. The Chapter 11 Bankruptcy case could go on for years. Soreide Law Group is currently investigating claims by investors regarding L Bonds offered by GWG Holdings, Inc. (GWGH).
As Soreide Law Group stated in earlier blog postings, GWG L Bonds were in jeopardy after GWG Holdings defaulted on interest and principal payments on January 15, 2022.  L Bonds are speculative, high-risk, and illiquid securities sold as private placement through broker/dealers nationwide. The L Bonds were not suitable for investors with a low-risk tolerance. GWG sold the L bonds through Emerson Equity LLC and other broker/dealers, who sold the products to individual retail investors. GWG may have sold as much as $2 billion of the high-yield L bonds over the past several years.
GWG Holdings, Inc. (GWGH) is a financial services company that sells life insurance bonds. The L bond was created by GWG as a financial instrument, which used money from bond investors to purchase life insurance policies on the secondary market. The payouts from the policies were used to pay investors.
The L Bond Timeline for 2022

• On April 20, 2022, GWG Holdings, Inc. filed Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas.  The principal and missed interest payments of GWG L Bonds became immediately due to GWG L Bond investors, but payment obligations are stayed as the case advances in bankruptcy court.
• On April 1, 2022, GWG Holdings, Inc. failed to file its annual financial statement for year-end 2021 on time, missing the deadline for the third time in the past four years.
• On February 14, 2022, GWG defaults on its obligations to L Bond holders.  GWG confirms in a letter to investors that it will not make monthly interest and maturity payments on its L Bonds or dividend payments to preferred stockholders as the company continues to evaluate restructuring alternatives
• The Wall Street Journal reports on January 27, 2022 that GWG is seeking financing to avoid bankruptcy after accounting issues and the resignation of its auditor prevented the company from selling its products. The Wall Street Journal also reported that the company is exploring options such as refinancing its senior credit facilities and restricting the L Bonds.
• GWG sends a notice to investors on January 24, 2022 telling them that it paused the sale of its L Bonds, retroactive to January 10, 2022, and that it missed interest, maturity, dividend, and redemption payments on January 15, 2022.
• On January 15, 2022, GWG missed interest payments of $10.35 million and principal payments of $3.25 million to GWG L Bond owners.
• On January 10, 2022, GWG paused L Bond sales while GWG works with its advisors to identify and evaluate options available to the company.

The L Bonds were sold by GWG through Emerson Equity LLC and other broker/dealers including Centaurus Financial, Inc., Aegis Capital, LLC, NI Advisors, Western International Securities, Inc., and other broker/dealers.
Broker/dealers are required to make recommendations that are suitable for their clients and to disclose all facts and risks when making recommendations. Brokers/dealers must do their due diligence or they can be held liable for damages.
If you have experienced losses due to to your broker/dealer or financial advisor’s recommendations of GWG L Bonds contact Soreide Law Group and speak to an experienced securities lawyer at no cost regarding the possible recovery of your investment losses through a FINRA arbitration at:  888-760-6552.
Soreide Law Group works on a contingency fee basis, no fee if no recovery, and represents our clients nationwide before FINRA.