On February 15, 2024, the GWG Wind Down Trust filed a status report with the United States Bankruptcy Court for the Southern District of Texas for the quarter ending December 31, 2023. Although the status report did not include an updated financial statement, there are several key takeaways:
On April 21, 2023, United States Bankruptcy Judge Marvin Isgur approved GWG’s Disclosure Statement that will be sent to creditors to vote on GWG’s Chapter 11 Plan (the “Plan”). The approval of the Disclosure Statement comes one year and one day after GWG filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas.
The Plan will now be sent to creditors, including L Bondholders, to accept or reject the Plan. GWG’s Plan is essentially an “orderly” liquidation. If the Plan is accepted, GWG will be liquidated in accordance with the terms of the Plan. If the Plan is rejected, GWG will likely be liquidated in accordance with Chapter 7 of the United States Bankruptcy Code. Either way, GWG will be liquidated and will not continue as a business. Creditors will need to decide which path of liquidation will be more favorable to them.
We believe that it is highly unlikely that L Bondholders will obtain a quick and full recovery through either the Chapter 11 Plan or a Chapter 7 liquidation.
**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: February 1, 2023** On February 1, 2023, the United States Bankruptcy Court for the Southern District of Texas unsealed several significant court filings, including a draft legal complaint. The complaint was filed by the Official Committee of Bondholders of GWG Holdings Inc. (“Bondholder Committee”) against certain current and/or former directors and officers of GWG Holdings, Inc., individuals, and corporate entities affiliated with or controlled by Brad Heppner, transferees of certain fraudulent transfers, and key broker-dealers who marketed and sold L Bonds. The Bondholder Committee represents the interests of GWG L Bondholders in the Chapter 11 bankruptcy proceeding.
The unsealed complaint has revealed the following allegations, which were made after the bondholder committees reviewed documents and information that are currently not in the public domain:
GWG L Bondholders who purchased the speculative, high-risk, illiquid, and unrated bonds through Newbridge Securities Corporation are worried after last week’s approval by the bankruptcy judge to allow GWG Holdings Inc. to enter into a new debtor-in-possession (“DIP”) financing package. The new DIP financing package includes an option for GWG Holding Inc. to sell its portfolio of life insurance policies for at least $610 million, approximately $1 billion less than GWG Holding Inc’s outstanding obligations to GWG L Bondholders.
Even though the portfolio of life insurance policies does not directly secure the GWG L Bonds, this development is significant for GWG L Bond investors because GWG Holdings Inc.’s largest tangible asset is its portfolio of life insurance policies. It is believed that the value of these tangible assets will significantly impact the outcome of GWG Holdings Inc.’s restructuring effort through its filing for Chapter 11 bankruptcy.
Upon information and belief, Newbridge Securities was a part of a network of broker-dealers who sold the risky GWG L Bonds. GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for bankruptcy protection earlier this year, on April 20, 2022.
Over the past calendar year, GPB Capital investors have won over $2.4 million in monetary awards in 10 out of 11 (nearly 91%) arbitration claims that have proceeded to a final hearing. According to public records, many other claims filed against broker-dealers who sold the private placements offered by GPB Capital have been settled for monetary compensation.
The judgments and awards come after years of filing lawsuits and arbitration claims by GPB Capital investors.
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Iorio Altamirano LLP is investigating claims on behalf of defrauded investors who were victims in the GPB funds scheme. The GPB funds were marketed to independent broker-dealers and investment advisers who would, in turn, sell the GPB funds to their retail investors. According to publicly available records filed with the SEC, broker-dealer Newbridge Securities Corporation likely received sales compensation for selling the GPB funds to retail investors.
The following Newbridge Securities Corporation brokers may have recommended GPB Capital funds to clients:
**Update 4/14/2021** Iorio Altamirano LLP is currently investigating Newbridge Securities Corporation, Money Concepts Capital Corp, and Dustin Shafer for recommending that clients invest in private placement securities issued by GPB Capital. The GPB funds, which are private securities offerings exempt from registration with the Securities and Exchange Commission (SEC), are inherently risky investments. These investments are suitable only for highly sophisticated investors who understand the risks and can afford a significant monetary loss. Unfortunately, many brokerage firms and brokers sold the GPB Capital securities to retirees and unsophisticated investors because they paid a high up-front commission.
If you have suffered financial losses as a result of any of the following GPB private placement offerings, contact Iorio Altamirano LLP for a free and confidential review of your legal rights:
FINRA has permanently barred Jeffrey A. Broten from the securities industry. Jeffrey Broten was a financial advisor and registered representative at the following firms:
Securities Arbitration Lawyer Blog