After months of working with legal and financial advisors to try and restructure outside of court, on April 20, 2022, GWG Holdings, Inc. filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas. The bankruptcy filing is a significant and troublesome development for GWG L Bond investors who invested substantial portions of their life savings into GWG L Bonds. According to GWG’s latest filing with the SEC, GWG has more than $1.6 billion in aggregate principal outstanding to GWG L Bond investors. A Chapter 11 bankruptcy will allow GWG Holdings to propose a reorganization plan.
Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar. Despite the unwelcomed news, GWG L bond investors are not without recourse. Many retail investors, including those represented by securities arbitration law firm Iorio Altamirano LLP, are filing securities arbitration claims against brokerage firms that sold these speculative, high-risk, and illiquid financial products. These actions are separate and in addition to the bankruptcy proceedings.
GWG Holdings’ bankruptcy filing revealed for the first time that the ongoing investigation by the United States States Securities and Exchange Commission (SEC) includes an examination of sales practices of the GWG L Bonds by the Selling Group, including Emerson Equity LLC and its network of regional broker-dealers. According to the recent bankruptcy filing, the SEC issued subpoenas and document requests to individual brokerage firms beginning in late-2021.