How to recover Financial Losses involving GWG Holdings Inc. (GWGH) and GWG L Bonds
The White Law Group continues to investigate GWG Holdings Inc. and the liability that brokerage firms may have for unsuitably recommending GWG offerings to investors. If you are concerned about your investment with GWG Holdings, you may be able to file a complaint against your brokerage firm. (For more information on recovery options please see: FINRA Lawsuit filed against Emerson Equity LLC involving $2.5 Million in GWG Bonds)
According to a press release on April 20,2022, GWG Holdings, Inc. has just filed for Chapter 11 bankruptcy protection. This comes after the company reported in a new filing on April 1, that is would not be able to file its Annual Report on Form 10-K for the year ended December 31, 2021. Apparently, its independent registered public accounting firm quit in January. The company has missed numerous filing deadlines in the past.
According to the news release, GWG and its subsidiaries, GWG Life, LLC and GWG Life USA, LLC, have filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas as part of a restructuring process. The company says it “expects restructuring to strengthen its financial position and enhance the value of its assets.”
February 14, 2022 – GWG Buying Time with Letter to Investors
Those investors who were hoping to see a February interest payment from GWG Holdings may be sorely disappointed today. In a letter to investors on February 14, the company says while it is progressing in its work of “identifying and evaluating restructuring alternatives,” the monthly interest, and maturity payments, dividends and redemptions remain paused. The company says the process may take another 3-4 weeks and it will “inform you if and when we are able to restart these cash payments in the future.”
GWG Holdings finances its portfolio of life insurance assets through the sale of alternative investment products, such as debentures and L-bonds, according to its website. Although these products are touted as offering potentially higher yields than other investment assets that are correlated with the traditional stock and bond markets, they may come at a much greater risk to investors.
GWG Fails to Make Interest Payments for L Bonds in January 2022
According to filings with the SEC on January 18, 2022, due to the decreased sales of its L Bonds, GWG 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 L Bonds. If the company fails to make the payments in the next 30 days it will result in default, according to the filing.
Further, the company says that it believes that the filing of its Annual Report on Form 10-K for the year ended December 31, 2021, will likely be late as the independent registered public accounting firm it was working with declined to stand for reappointment. This would also likely result in a voluntary suspension of the sale of L Bonds. This is not the first time the company has failed to file financial reports. See below.
GWGH Nasdaq Delisting
GWG Holdings announced on September 7, 2021 that it has “successfully appealed a notice of delisting” by the Nasdaq Stock Market, but according to a Form 10-K filed on November 5, it may not be enough. The company was required to file current financial statements through June 30, 2021 by October 31, 2021, and hold its 2020/2021 annual meeting by December 31, 2021.
But according to the 10-K, the company has not yet filed all of the reports that were requested. Further, it notes that if it is “unable to regain compliance with Nasdaq’s filing requirements for continued listing, we expect GWG Holdings to be delisted, in which case our business and the value of our securities would likely be materially and adversely impacted.” GWG noted it has “not yet received notice from Nasdaq regarding delisting.”
Troubling News for GWG investors
In the filing on Nov. 5, GWG warns, “the potential NASDAQ delisting, in combination with significant recurring losses from operations, negative cash flows from operations, delays in executing our business plans, and any potential negative outcome from the ongoing SEC investigation discussed elsewhere in this Form 10-K, raise substantial doubt about our ability to continue as a going concern.”
GWG L bonds Sales Suspended
The company notes that its success relies “heavily” on debt financing through the sale of L Bonds to raise sufficient capital to meet its obligations. The offering of GWG Holdings’ L Bonds has been suspended since April 16, 2021, as a result of the delay in filing certain periodic reports with the SEC, including this 2020 Form 10-K.
SEC Investigates GWG Holdings
The company received a subpoena on October 6, 2020, to produce documents from the Chicago office of the SEC’s Division of Enforcement, informing the Company of the existence of a non-public, fact-finding investigation into GWG Holdings.
Since the initial subpoena, GWG has reportedly received subsequent subpoenas from the SEC for additional information. The requested information from the SEC is primarily related to GWG Holdings’ investment products, including its L Bonds, as well as various accounting matters. The company says it is “cooperating fully with the SEC in connection with its investigation.”
How to Recover Investment Losses involving GWG L Bonds
The White Law Group Continues to investigate potential securities claims involving GWG offerings such as L Bonds. The firm has received numerous calls from investors worried about their missed interest payments.
Brokers are required to perform adequate due diligence on any investment to determine if such investment is suitable for each individual client. Investment recommendations should be in line with the client’s age, investment experience, net worth, risk tolerance, investment objectives, and income.
When a broker overlooks suitability requirements or misleads a client, not only are they potentially liable for investment loss, the brokerage firm that employs such brokers may also be on the hook for losses.
Filing a Complaint against your Brokerage Firm
If you invested in L bonds issued by GWG Holdings Inc. and would like to discuss your litigation options with securities attorneys, please call The White Law Group at 888-637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington.
For more information on The White Law Group, visit https://www.whitesecuritieslaw.com.
To learn more about the investigation, please see: