GWG Holdings Files for Chapter 11 Insolvency
GWG Holdings, a Dallas, Texas-based insurance services provider and seller of life-insurance-backed bonds, has filed for Chapter 11 bankruptcy protection.
The company has filed for insolvency in the U.S. Bankruptcy Court for the Southern District of Texas. Reuters reported that GWG has $2 billion in debt, including $1.6 billion in outstanding bonds. The company had also specified a $65 million loan from National Founders LP to fund its operations through the bankruptcy process.
In a statement, GWG CEO Murray Holland said the insolvency proceedings should “strengthen the company’s financial position in the future and help preserve the value of the company’s assets for the benefit of its investors”.
GWG explained that its insolvency was due to its inability to access capital markets and regulatory issues related to the United States Securities and Exchange Commission’s investigation into GWG’s accounting.
The SEC began its investigation of “certain accounting matters” with GWG and its bond issuance in 2020. It was also noted that the following year, 2021, GWG filed certain overdue financial statements – the company had attributed this delay to accounting problems. For this reason, GWG stopped issuing bonds over an eight-month period, and its liquidity suffered.
The SEC investigation is ongoing, but GWG said it has not been reported for any wrongdoing.
GWG also faces lawsuits from investors; shareholders accused the company in February of misusing investors’ funds and failing to disclose that the company was under investigation by the SEC.
Reuters reported that lawyers for GWG will appear before US Bankruptcy Judge Marvin Isgur this week to seek approval to access the bankruptcy loan.