GWG Holdings Inc has been unable to sell its products and is seeking rescue financing. It is exploring options, including restricting its L Bonds and refinancing its senior credit facilities. It also has the option of filing for Chapter 11 bankruptcy. In the meantime, investors are entitled to file individual arbitration claims if they wish to pursue such a claim.
Many investors that were sold GWG stocks and bonds are now filing FINRA claims against their financial advisors. The law firm Haselkorn & Thibaut is representing investors to recover what may be massive losses. Investors can call 1 888-628-5590 for a free consultation.
You are eligible for individual arbitration claims if you own GWG Holdings L Bonds. If your broker or firm fails to manage your investment properly, you can pursue a claim to recover damages. Fortunately, these lawsuits are generally relatively simple, can be handled quickly and confidentially, and do not require depositions, extensive discovery, or motion practice.
In addition to filing individual arbitration claims against brokerage firms, GWG L Bond investors may pursue a case against broker-dealers who sold GWG L Bonds. These claims can be made without impacting your ability to pursue a GWG bankruptcy case or class action lawsuit.
If you believe your GWG L Bond investment is at risk of being canceled, contact an experienced securities arbitration law firm today. They can help you file a FINRA arbitration claim and recover investment losses.
GWG Holdings’ L Bonds were illiquid
Hundreds of brokerage firms sold GWG Holdings’ L Bonds, which lacked liquidity. This resulted in losses for investors. Brad Heppner, who helped set up the L Bond distribution platform, was accused of taking advantage of investors. The lawsuit claims that he hid the losses and made money. GWG is currently in Chapter 11 bankruptcy. However, investors still own their bonds.
GWG Holdings’ L Bonds became very popular among financial advisors, and many financial advisors solicited their clients to purchase them. Ultimately, over $1.6 billion worth of these bonds were sold. Since October 2020, GWG Holdings has been under investigation by the Securities and Exchange Commission. In December 2021, the company’s accountants resigned, and it is currently behind on paying investors’ interest payments.
GWG Holdings’ auditor resigned
In December 2021, GWG Holdings’ independent auditor, Grant Thornton, resigned after the company filed a public report admitting it had not made required quarterly bond payments. During the filing, GWG acknowledged that some of its financial statements were not reliable, promising to amend them by early April 2022. The company’s stock price collapsed following the announcement.
GWG Holdings is a holding company that invests in Life Epigenetics and GWG Life. The company has been accused of misleading investors through its misleading statements. However, the company is in a position to file for bankruptcy if it is not able to pay its creditors, and it has an agreement with National Founders L.P. to obtain a bankruptcy loan.
GWG Holdings’ L Bonds were collateral for other debt obligations
GWG Holdings’ L Bonds resembled traditional bonds but were unsuitable for retail investors. As such, they were not tradable on a stock exchange and had no market value.
This meant that investors could not determine the value of L Bonds or the creditworthiness of GWG without consulting a credit rating agency. Investors could also be unaware of the L Bonds’ risk profile because they did not have public trading data.
GWG Holdings issued L Bonds to finance the secondary market for life insurance policies. These bonds were issued between 2012 and 2021. The bonds were collateral for other debt obligations, and the company sold them to investors. However, investors were warned that they carried high risks and were not suitable for everyone. The company’s prospectus warned that investors should have enough liquidity to meet their obligations and risks, so they should avoid purchasing L Bonds without doing so.
GWG Holdings’ financial statements are incomplete
GWG Holdings’ financial statements are reportedly incomplete. It has yet to engage an auditor for its fiscal year that ends Dec. 31, 2021, and is reviewing potential candidates. In addition, it is unclear whether the company will make further financial disclosures before it can file its yearly report.
The company is required to disclose the financial information relating to the loans made by it. GWG is a Delaware corporation, and its subsidiaries include Beneficient Company Holdings, L.P., the parent company and equity owner of the company.
GWG Holdings filed for Chapter 11 bankruptcy
The debtors’ debtor-in-possession credit agreement (DIP) is a critical element of their plan to restructure their company, but it will be subject to court approval. The agreement provides GWG with approximately $65 million in principal. A lender, National Founders LP, secured the DIP.
In addition to the L Bonds, GWG Holdings has various financial products. For example, it has an extensive portfolio of life insurance policies, and it also has an economic interest in other non-affiliated companies. The company owns and manages a portfolio worth more than $1.8 billion in face value.