Law firm investigates GWG Holdings’ potential for Chapter 11 filing

By Sarah Lizee

Olympia, Wash., April 12 – Shepherd Smith Edwards & Kantas LLP is investigating GWG Holdings, Inc.’s potential Chapter 11 bankruptcy filing, the law firm said in a Tuesday afternoon press release.

Sources say GWG is expected to seek bankruptcy protection “very soon,” the firm added.

As previously reported, GWG notified the Securities and Exchange Commission that it was not able to timely submit its 2021 yearly report and other financial statements because it has yet to retain an auditor since Grant Thornton stepped down from that role in December.

GWG also has been under investigation in a non-public, fact-finding probe involving the SEC’s enforcement division.

“Not having an auditor for this long can be a sign that a company is planning to seek bankruptcy protection,” the firm said in the release.

GWG sold $1.6 billion in life settlement-backed bonds through many independent broker-dealers. In February, it defaulted on $13.6 million in principal payments plus interest that it owed investors of the bonds.

Following reports that GWG may be preparing for bankruptcy, trading in the company’s shares on April 4 had dropped over 16% to $4.48 per share. Trading also was suspended and resumed several times.

On April 11, GWG shares were trading at $1.73 per share.

“L-bond investors are likely to suffer huge losses in the wake of a GWG Holdings bankruptcy filing,” the firm said.

“Many of them are retirees, older investors, conservative investors, and other retail investors whose financial advisors should never have marketed and sold them these illiquid, risky high-yield bonds. Many L-bond investors placed their life savings in these bonds.”

Shepherd Smith Edwards & Kantas said it is representing bondholders in Finra arbitration against their broker-dealers.

GWG is a life insurance company based in Minneapolis.

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