GWG Holdings Inc. (NASDAQ: GWGH), also known as GWG, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas on March 15, 2019. (case number 22-90032). The firm's total liabilities were estimated to be at $2.1 billion.
The recent declines in the value of various stock, preferred stock, and bond investments issued, as well as the pending bankruptcy, could be disastrous for GWG investors who purchased and are likely still holding various bonds, preferred stock, or common stock in GWG, as it could mean they have or will face investment losses based on the decline in the value of those securities.
Many investors that were sold GWG L Bonds are now filing claims against their financial advisors. The law firm Haselkorn & Thibaut is representing investors to recover what may be huge losses. Investors can call 1 888-628-5590 for a free consultation.
GWG Holdings is currently dealing with a series of accounting issues. The company has been struggling to file financial statements, and in October 2020, the SEC's enforcement division served the company with a subpoena. These issues are related to GWG's bond issuance and accounting practices.
While this may not seem like a big deal to many people, the questions raised by the SEC could negatively impact the company's bond sales. This has caused broker firms to suspend sales of the company's bonds until further notice.
Among other things, GWG has been late filing its annual financials. The company had also disclosed that it had entered into a series of transactions with an unregistered investment company named Beneficient. These deals resulted in a reorientation of the business and a diversification of its exposure to alternative assets. While it is unclear whether these issues have affected the company's finances, GWG has taken steps to rectify the situation.
The company is now exploring rescue financing options. Since it cannot sell its products, GWG is exploring options to limit its debt and refinance its senior credit facilities. It is also looking into the possibility of Chapter 11 bankruptcy.
The lack of liquidity at GWG Holdings Inc. was a major concern for investors. An SEC investigation was launched in 2020, and the company had failed to file its annual report properly and was failing to issue bonds.
As a result, the firm could not meet its financial obligations, which hurt its liquidity. Additionally, it is now facing legal action from its investors, who claim that the company mishandled its funds and failed to disclose the SEC investigation.
The company filed with the Securities and Exchange Commission on January 18, explaining that it lacks liquidity and capital in the market. This is a very concerning development for investors, especially retail investors who invested in GWG's L Bonds. Without liquidity, GWG Holdings will face a significant reduction in value.
To make matters worse, GWG has been battling insolvency and recently added two new independent directors to its board. These new directors will serve until the bankruptcy court approves its reorganization plan or dismisses the Chapter 11 cases. They will also determine the company's long-term financial and operational outlook.