GWGH - Law Office of Christopher J. Gray, P.C.

GWG Holdings Files Bankruptcy- Will Likely Lead To Investor Losses

InvestorLawyers — Mon, 25 Apr 2022 22:37:11 GMT

Investors in securities sold by GWG Holdings (“GWGH”), including L Bonds, preferred stock, and common stock listed on Nasdaq under the ticker symbol GWGH, may have legal claims, including possible claims if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or financial advisor.

GWGH filed for federal Chapter 11 bankruptcy proceedings in Houston, Texas on April 20, 2022, blaming its financial dire straits on an inability to raise capital. The bankruptcy petition is accessible here 22.4.20 bk petition. In a bankruptcy court filing, GWG cited the Securities and Exchange Commission’s questioning of broker-dealers that sold more than $1.6 billion of its life-settlement backed bonds as a significant reason for the company’s collapse, which led to GWGH’s default on $13.6 million in payments due to in January. As GWGH stated in a court filing: “The SEC’s investigation, particularly its focus on how the bonds were sold by selling group firms, has had the effect of significantly impacting the company’s ability to access the capital market… .” “As a result, a number of broker firms indicated that they would not resume sale of the bonds until further notice due to concerns of getting involved further in the SEC’s investigation,” according to the GWGH declaration filed in bankruptcy court.

According to GWG’s website, Emerson Equity, a San Mateo, California-based broker-dealer that primarily sells private placements, is the managing broker-dealer for the GWG issuer. GWGH L Bonds were reportedly sold through network of 145 “member firms and registered investment advisors” according to filings by GWGH in bankruptcy court.

With regard to the life insurance policies owned by GWGH, bankruptcy court papers stated that most of the policies were acquired during a period ending in 2018, which may surprise some investors who were under the impression that the purchase of life settlements remained GWGH’s principal line of business. GWGH filings also indicated that the cost to maintain and service its portfolio of insurance policies is $5 to $7 million a month.

GWGH L Bonds are high-yield life insurance bonds used to finance the purchase of life insurance on the secondary market. Any type of investment in the secondary life insurance market is an extremely risky investment. Broker dealers are required to perform adequate due diligence on any investment they recommend. They must ensure that all recommendations are suitable for the investor. Recommendations should be in line with the investor’s age, risk tolerance, net worth, and investment experience. If brokerage firms fail to adequately disclose risks or make unsuitable investment recommendations can be held liable for investment losses.

Investors who wish to discuss a possible claim involving GWGH securities may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation. Attorneys at the firm are admitted in New York, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).

This article is intended as ATTORNEY ADVERTISING and is not an official announcement.

GWG Holdings May File Bankruptcy- Investors May Have Claims

InvestorLawyers — Wed, 06 Apr 2022 18:40:51 GMT

Investors in securities sold by GWG Holdings (“GWGH”), including L Bonds, preferred stock, and common stock (listed on Nasdaq under the ticker symbol GWGH), may have legal claims, including possible claims if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

According to an article that appeared in The Wall Street Journal on April 4, 2022 GWGH is reportedly preparing to file for Chapter 11 bankruptcy in the coming days. A bankruptcy filing would likely cause delays in payments of interest and principal to holders of GWGH L Bonds, and might also imperil the repayment of principal in whole or in part.

GWGH reportedly has about $1.6 billion in principal value of L Bonds outstanding. While no one knows for sure where L Bond investors will land in the event of a bankruptcy, the publication Investment News has reported that one anonymous GWGH L bond investor estimates that the GWG L Bonds would be worth 20 to 30 cents on the dollar if GWGH files for bankruptcy.

The possible bankruptcy is just the latest adverse event surrounding GWGH. Only last week, GWGH announced that it could not timely make its annual report filing with the Securities and Exchange Commission. GWGH has now failed to timely file annual reports with the SEC in three of the past four years. Further complicating matters, GWGH currently has no auditor. It last auditor, Grant Thornton, resigned in December 2021.

As previously discussed on this blog, on February 14, 2022 GWGH officially defaulted on its obligations to L Bond investors and confirmed in a letter to investors that it will not be making monthly interest or maturity payments on its GWGH L Bonds, or accepting redemption requests, while it continues to identify and evaluate restructuring alternatives with its advisors. Now it appears that this unspecified “restructuring alternative” will be a declaration of bankruptcy.

GWGH L Bonds are high-yield life insurance bonds used to finance the purchase of life insurance on the secondary market. Any type of investment in the secondary life insurance market is an extremely risky investment. While GWCH reportedly has close to $1 billion in tangible assets, the company also has over $1.5 billion in outstanding L Bonds, plus $327.7 million owed in senior credit facilities.

GWGH is a Dallas-based financial services firm that offers a variety of ‘services including life insurance and alternative investments. GWGH sold millions of dollars’ worth of L Bonds over the past several years, including sales to public investors through brokerage firms. L Bonds are a financial product that purportedly offers higher yields than typical publicly traded bonds. L Bonds are sold by life insurance companies that buy back the policies from policyholders. The bonds are supposed to help finance the purchase of the policies. According to a prospectus published by GWGH for the offering of $2 billion of L Bonds, the bonds were sold with varying maturity terms ranging from 2 years to 7 years, with interest rates ranging from 5.50% to 8.50%.

Broker dealers are required to perform adequate due diligence on any investment they recommend. They must ensure that all recommendations are suitable for the investor. Recommendations should be in line with the investor’s age, risk tolerance, net worth, and investment experience. If brokerage firms fail to adequately disclose risks or make unsuitable investment recommendations can be held liable for investment losses.

This article is intended as ATTORNEY ADVERTISING and is not an official announcement.

GWG Holdings Officially Defaults On L Bonds Interest Payments- Investors May Have Claims

InvestorLawyers — Tue, 15 Feb 2022 23:30:39 GMT

30 days after missing interest and principal payments that were due to be paid to L Bond investors on January 15, 2022, GWGH’s grace period to make the interest and maturity payments before it was officially in an event of default expired as of February 14, 2022.

On February 14, 2022, GWG Holdings, Inc. confirmed in a letter to investors (accessible here GWG Letter) that it will not make monthly interest and maturity payments on its L Bonds, or dividend payments to preferred stockholders until further notice. In addition, GWG holdings has confirmed that it will continue to defer requests for redemptions.

In the letter to investors, GWGH stated as follows regarding its future plans: “We are progressing in our work with financial and legal advisors hired to assist the Company’s Board of Directors and management in identifying and evaluating restructuring alternatives, as well as available options to best conserve and maximize the value of GWGH’s assets for the benefit of our investors and to meet the Company’s financial obligations.” GWGH projected that its restructuring evaluation may take three to four weeks, or longer.

As a result of GWG Holdings, Inc.’s default, L Bond owners are left holding securities that cannot be sold or redeemed, and no longer paying their promised income.

GWGH L Bonds are high-yield life insurance bonds used to finance the purchase of life insurance on the secondary market. Any type of investment in the secondary life insurance market is an extremely risky investment. Further, default on the L Bonds seems to be imminent. According to its filings with the Securities and Exchange Commission (“SEC”), GWG has halted the sale of the L Bonds and failed to issue $10.35 million of interest payments and $3.25 million of principal payments to L Bond investors by the January 15, 2022 due date. If these payments are not made by February 14, 2022, GWG will be in default.

This article is intended as ATTORNEY ADVERTISING and is not an official announcement.

GWG Holdings- L Bond Issuer- Announces Restructuring Plans Amid Foundering Financial Results

InvestorLawyers — Thu, 03 Feb 2022 00:19:21 GMT

According to a January 18, 2022 Form 8-K filing with the Securities and Exchange Commission (SEC) the Board of Directors of GWG Holdings, Inc. (GWGH) has authorized GWGH’s management to retain the services of a restructuring advisor. According to the same filing, GWGH expects t retain FTI Consulting, Inc. as its restructuring advisor, and Mayer Brown LLP as restructuring legal advisor “to assist the Company’s Board of Directors and management in evaluating alternatives with respect to its capital structure and liquidity.”

The putative restructuring comes amid continued financial struggles for GWGH. GWGH had previously announced mounting losses, including $169.9 million in the first nine months of 2021 and a total of $168.5 million for fiscal year 2020. GWGH has also disclosed a going concern and material weakness in internal controls in its recent financial filings. The going concern disclosure indicates there is substantial doubt about GWGH’s ability to meet its financial obligations as they come due over the next 12 months due to GWGH’s recent inability to raise capital, recurring losses from operations, and potential negative implications of the ongoing SEC non-public, fact-finding investigation. The internal controls disclosure indicated that management had determined that GWGH’s internal controls were not sufficient to ensure amounts recorded and disclosed were fairly stated in accordance with GAAP. In summary, GWGH has disclosed its reported financial results’ accuracy cannot be relied upon, and that it may not be able to stay in business for any sustained period going forward.

How GWGH’s struggles will ultimately impact L Bond holders and other holders of securities of the company is unknown, but according to its filings with the Securities and Exchange Commission (“SEC”), GWGH has halted the sale of the L Bonds and failed to issue $10.35 million of interest payments and $3.25 million of principal payments to L Bond investors by the January 15, 2022 due date. GWGH L Bonds are high-yield life insurance bonds used to finance the purchase of life insurance on the secondary market. Any type of investment in the secondary life insurance market is an extremely risky investment. GWGH also has outstanding shares of common stock and preferred stock, in addition to L Bonds.

GWGH has previously announced that on October 6, 2020, GWCH received a subpoena to produce documents from the Chicago office of the SEC’s Division of Enforcement, as part of a non-public, fact-finding investigation into GWG Holdings. Since the initial subpoena, the Company has reportedly received subsequent subpoenas from the SEC for additional information. According to publicly available information in GWCH’s SEC filings, the requested information from the SEC has primarily related to GWG Holdings’ investment products, including its L Bonds, as well as various accounting matters.

This article is intended as ATTORNEY ADVERTISING and is not an official announcement.

GWG Holdings Faces Default On L Bonds Interest Payments- Investors May Have Claims

InvestorLawyers — Mon, 31 Jan 2022 22:30:18 GMT

GWGH L Bonds are high-yield life insurance bonds used to finance the purchase of life insurance on the secondary market. Any type of investment in the secondary life insurance market is an extremely risky investment. Further, default on the L Bonds seems to be imminent. According to its filings with the Securities and Exchange Commission (“SEC”), GWG has halted the sale of the L Bonds and failed to issue $10.35 million of interest payments and $3.25 million of principal payments to L Bond investors by the January 15, 2022 due date. If these payments are not made by February 14, 2022, GWG will be in default.

While GWCH reportedly has close to $1 billion in tangible assets, the company also has over $1.5 billion in outstanding L Bonds, plus $327.7 million in senior credit facilities. On August 1, 2021, GWG disclosed that its previous Annual and Quarterly reports for 2019 and 2020 were not reliable after consulting with the SEC’s Office of the Chief Accountant. GWGH also has announced that it would be late in completing and filing its Annual 10-K report with the SEC, which is due March 31, 2022.

In March 2021, GWGH notified the Securities and Exchange Commission (SEC) that it could not timely file its Forms 10-K and 10-Q, which are annual and quarterly financial reports and company disclosures. GWG said it needed additional time to complete these financial statements and related disclosures. This prompted a deficiency letter from Nasdaq in April 2021.

GWGH did not make the January 15, 2022 interest payment of approximately $10.35 million and principal payments of approximately $3.25 million with respect to its outstanding L Bonds.

This article is intended as ATTORNEY ADVERTISING and is not an official announcement.

GWG Holdings Fails to Make Interest Payments Due on L Bonds- Investors May Have Claims

InvestorLawyers — Wed, 26 Jan 2022 19:36:19 GMT

Investors in securities sold by GWG Holdings (“GWGH”), including L Bonds and common stock listed on Nasdaq under the ticker symbol GWGH, may have legal claims, including possible claims if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

GWGH recently failed to make a scheduled interest payment of over $10 million due on certain securities sold to investors known as “L Bonds”. GWGH’s common stock price has also plummeted by over half in 2022, from an opening price of $9.80 a share on January 3, 2022 to a closing price of $4.11 a share on January 25, 2022.

Now, the Board of Directors of GWGH has reportedly authorized management to retain the services of a restructuring advisor, which the Company expects will be FTI Consulting, Inc., and Mayer Brown LLP as restructuring legal advisor to assist the Company’s Board of Directors and management in evaluating alternatives with respect to its capital structure and liquidity.

GWGH suspended its L Bonds sales effective as of January 10, 2022. GWG had previously suspended sales of L Bonds for eight months during 2021 due to the fact that it was unable to timely file its Annual Report with the SEC. GWG now says that its 2021 Annual Report also likely will not be filed on time.

GWGH’s independent accounting firm, Grant Thornton, has declined to stand for reappointment. Although it publicly stated that it did not have any disagreements during the year ended December 31, 2020 and through January 6, 2022 with GWGH concerning accounting principles or practices or financial statement disclosure, Grant Thornton also had previously stated as follows with respect to GWGH: “As of December 31, 2020, the design and operating effectiveness of controls over the selection, application and review of the implementation of accounting policies were not sufficient to ensure amounts recorded and disclosed were fairly stated in accordance with GAAP. This material weakness resulted in the Restatement.”

GWGH also did not make the January 15, 2022 interest payment of approximately $10.35 million and principal payments of approximately $3.25 million with respect to its outstanding L Bonds.

The foregoing article is intended as ATTORNEY ADVERTISING and is not an official notice.