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GWG Could Sell Its Portfolio of Life Insurance Policies for $610 Million, $1 Billion Less Than It Owes to GWG L Bond Investors
On July 18, 2022, the Texas Southern Bankruptcy Court approved a new debtor-in-possession financing package that includes an option to sell GWG Holding Inc.’s portfolio of life insurance policies to Chapford SMA Partnership, L.P. for at least $610 million.
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.
As of the bankruptcy filing on April 20, 2022, GWG Holdings, Inc. had over $1.6 billion in outstanding GWG L Bond obligations, mainly owed to retail investors.
GWG L Bond investors are worried about the $1 billion shortfall between the amount of principal owed to bondholders and the potential amount that GWG Holdings may be able to recover through the sale of its only tangible assets.
Our Law firm 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.
Investors who purchased GWG L Bonds through a financial advisor are encouraged to contact Iorio Law PLLC (www.gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.
About GWG L Bonds
An L bond is a financial product created by GWG Holdings, Inc. (GWGH). The L Bonds are speculative, high-risk, illiquid, and unrated alternative investment offerings.
Initially, GWG Holdings pooled money from bond investors to purchase life insurance policies on the secondary market, paid the policy premiums, and then collected the death benefit when the insured individual passed away. However, beginning in 2018, GWG Holdings used the investor capital to invest in a new business model, exposing the company to riskier alternative assets. Many GWG L Bond investors were utterly unaware that GWG materially reoriented its business model, which, in our view, made it a much bigger credit risk. Additionally, many GWG L bond investors were not told by their financial advisors that GWG used investor capital to pay out the high distributions owed to other GWG L Bond investors in a Ponzi-like scheme.
GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022.
Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. 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.
Broker-dealers and brokers are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.
For the latest on Iorio Law PLLC’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Law PLLC’s Investigation of GWG L Bonds.
See Also:
GWG L Bond Investor Recovers Losses After Filing a FINRA Arbitration Claim
Law Firm Investigating Dempsey Lord Smith, LLC for the Sale of GWG L Bonds and GPB Capital Funds
Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Aegis Capital Corp
GWG L Bond Investors Seek Recourse After GWG Holdings, Inc. Files for Chapter 11 Bankruptcy
About Iorio Law PLLC
Iorio Law PLLC 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 15 years of experience as securities arbitration lawyers and have helped investors recover investment losses in over 800 cases. The 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.
This blog was published by August Iorio when he was a Partner at his previous firm and has been updated to reflect Iorio Law PLLC’s new contact information. To evaluate any potential claims, contact securities arbitration lawyer August Iorio for a free consultation contact Iorio Law PLLC at info@iorio.law or (646) 330-4624.