GWG Holdings Chapter 11 Update
In mid-January 2023, GWG announced a plan to emerge from the Chapter 11 reorganization process that the company filed in April 2022. As investors in the GWG L Bonds well know, this action followed the company’s decision to cease all interest payments on the securities.
The initial reorganization plan was filed on December 1, 2022, which was accompanied by their initial “Disclosure Statement.” In that statement, the company indicated it chose the Chapter 11 proceeding (as opposed to liquidation under Chapter 7), to put bondholders in a position to receive
Maximum benefit by “giving bondholders, who hold the largest amount of outstanding debt, the ability to benefit from the Company’s life settlements portfolio and the company’s interest in the Beneficient Company Group, LP. And FOXO Technologies, Inc.”
As part of the reorganization plan, the company has proposed continued operation as a going concern as well as making an immediate cash payment to the L Bond holders. Also, under the plan, the bonds would be retired and a combination of cash distributions and “New Preferred Stock” would be issued in their place. The value of the cash and new preferred securities would theoretically be equal to the principal debt amount outstanding for each L Bond investor plus accrued interest through the date of the Chapter 11 filing (April 20, 2022). Under the proposed plan, the New Preferred Stock would accrue dividends at 9% per annum and would be considered senior in priority and recovery to all other securities other than certain senior debt. The preferred stock would also be convertible to common stock at the discretion of the individual investors at a ratio that has yet to be determined as of the mid-January proposal release.
In general, this plan appears to be optimistic given the company’s current financial situation, and, as such, L bond investors may still end up with substantial losses when the dust settles. Accordingly, we encourage L Bond investors to contact the securities attorneys at Colling Gilbert Wright PLLC for a complimentary evaluation of a potential claim.
If you have concerns about your L Bond investment, our attorneys can help. To arrange a free consultation with an attorney at Colling Gilbert Wright, please call (888) 513-3010 or contact us online today.