Securities Arbitration Lawyer Blog
**Update: November 1, 2023** On October 13, 2023, the GWG Wind Down Trust sold two of its four assets for only approximately $10.5 million. The GWG Wind Down Trust sold its largest tangible asset, its portfolio of life insurance policies, realizing only $10 million in cash. In addition, on October 13, 2023, the GWG Wind Down Trust sold its equity interest in Foxo Technologies, Inc. for $586,943. The $10.5 million in recovery represents approximately 0.8% of the $1.3 billion in obligations owed to L Bond investors/creditors.
Further, over the past month, the share price of Beneficent has continued to fall and is currently trading at approximately $0.60 per share.
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. Iorio Altamirano LLP has already helped GWG L Bond investors recover over $1.4 million in losses.
If you would like more information about how to file a claim, please contact our firm to schedule a free and confidential consultation.
Original Post:
On October 3, 2023, Liz Freeman, the Trustee of the GWG Wind Down Trust, received approval from the United States Bankruptcy Court for the Southern District of Texas to sell the portfolio of life insurance policies for only $10 million in cash.
The purchaser will also assume the Vida Exit Facility, which has a balance of approximately $605 million. Of the $10 million, $2.9 million will likely be held in Trust for up to three years. There is also ongoing litigation about whether GWG and the Wind Down Trust owe $18 million to a previous debtor-in-possession lender. If the Bankruptcy Court determines that it does, then L bondholders will get nothing from the sale of the portfolio of life insurance policies. At best, though, L Bondholders will collectively receive at most $7 million. That’s only 0.5% of the $1.3 billion in outstanding L bond obligations.
These realities likely led United States Bankruptcy Judge Marin Isgur to conclude that “there is no material recovery that will go out on percentage basis out of the liquidation of this portfolio [of life insurance policies].”
He also stated that he continues “to believe that the [GWG] L Bondholders will lose a very large percentage of their investments.”
That’s likely because the only other two assets held by the GWG Wind Down Trust to be liquidated are (1) 4.6 million shares of common stock in FOXO and (2) 169.7 million shares of common stock in Beneficent, which are close to worthless.
FOXO currently trades around $0.12 per share (giving the shares a book value of $552,000). However, Ms. Freeman testified at the hearing that the “securities are not marketable” and that the company “is evaluating its options, not doing well, and may file for bankruptcy itself.” Stated another way, the asset is nearly worthless at this time.
Beneficent is currently trading at around $1.29 per share. However, the shares have not been marketable. Beneficent’s S1 was approved last week by the SEC, so some restrictions are being lifted. Still, there is no reason to believe that the GWG Wind Down Trust will be able to liquidate its shares for any substantial value. Mr. Freeman testified that there are problems associated with liquidating the shares, including the fact that trading volume has been very low. There does not appear to be a market for 169.7 million shares. Further, many believe that dumping that kind of position onto the market would likely drive Beneficent’s share price to $0.
The only other asset that the GWG Wind Down Trust owns is a beneficiary interest in the GWG Litigation Trust. The GWG Litigation Trust is pursuing legal causes of action against companies and individuals that may have violated laws prior to GWG’s bankruptcy filing. However, any recovery from these legal causes of actions remains unknown and speculative.
The following is a summary of the GWG Wind Down Trust’s Assets:
| Asset | Latest Information Regarding Residual Value for GWG L Bond Holders |
| Portfolio of Life Insurance Policies | The Bankruptcy Court approved the sale of the portfolio of life insurance policies on October 3, 2023, for $10 million.
Of that $10 million, it’s likely that GWG L Bondholders will receive $0 – $7 million collectively. That’s 0.5% of the outstanding $1.3 billion owed to L Bondholders. Likely recovery for L Bondholders: 0 – 0.5% |
| FOXO – 4.6 million shares of common stock of FOXO Technologies, Inc. | FOXO is currently trading around $0.12 per share (as of market close on 10/6/2023).
However, Ms. Freeman testified on October 3, 2023, that the “securities are not marketable” and that FOXO was “evaluating its options,” “not doing well,” and “may file for bankruptcy itself.” Likely recovery for L Bondholders: 0 – .00001% |
| BEN – 169.7 million shares of common stock in Beneficient | Beneficent is currently trading at $1.29 per share (as of market close on 10/6/2023).
Beneficent sustained an operating loss of $1.15 billion in the second quarter of 2023. As of July 31, 2023, Beneficient had only $4.4 million in unrestricted cash. The company will try to meet its ongoing obligations by furloughing and potentially laying off employees. Excluding goodwill, Beneficient had net assets of only $260 million as of June 30, 2023. On June 29, 2023, Beneficient received a “Wells Notice” from the SEC’s Division of Enforcement, stating that the SEC has made a preliminary determination to recommend that the SEC file a civil enforcement action against the company alleging violations of certain provisions of the Securities Act and the Securities Exchange Act relating to the Company’s association with GWG Holdings. In addition, the company’s Founder, CEO, and Chairman, Brad Heppner, also received Wells Notices related to the investigation of GWG Holdings. Mr. Freeman testified on October 3, 2023, that there are problems associated with liquidating the shares, including the fact that trading volume has been low. There does not appear to be a market for 169.7 million shares. Likely recovery for L Bondholders: Something Nominal |
| Litigation Proceeds | Michael Goldberg, Litigation Trustee, will pursue separately from the GWG Wind Down Trust the “Retained Causes of Action.” The proceeds received by the GWG Wind Down Trust from any success by the Litigation Trustee in the prosecution of these lawsuits shall be used solely to make the distributions under the confirmed Plan, and the Litigation Trust Amounts may not be used for any other purpose without the approval of the Bankruptcy Court or written consent of the Litigation Trustee.
Likely recovery for L Bondholders: Unknown |
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. Iorio Altamirano LLP has already helped GWG L Bond investors recover over $1.4 million in losses.
If you would like more information about how to file a claim, please contact our firm to schedule a free and confidential consultation.
To read more about GWG L Bonds and the alleged misconduct, please visit our other blog posts:
GWG’s Bankruptcy Plan Goes into Effect; GWG L Bonds Canceled
What L Bondholders Need to Know About GWG Holdings, Inc.’s Chapter 11 Plan
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.