GWG Bondholders Offered Settlement Worth Just Cents on the Dollar
From the desk of Jim Eccleston at ÍøÆسԹÏ
Distressed investors who purchased $1.6 billion in GWG L bonds may soon receive a small fraction of their original investment under a proposed settlement. InvestmentNews reports that Beneficient, a platform for illiquid alternative investments formerly affiliated with GWG Holdings Inc., has offered $50.5 million to settle lawsuits tied to GWG’s collapse.
GWG filed for Chapter 11 bankruptcy in April 2022. Before that, around 40 broker-dealers sold investors the GWG L bonds in $1,000 units, marketing them as being backed by life settlements. Beneficient, which spun off from GWG shortly before the bankruptcy, now seeks to resolve claims stemming from federal lawsuits, including those consolidated in GWG’s bankruptcy proceeding.
Michael Goldberg, the trustee of the GWG Litigation Trust, submitted the proposed resolution, which includes liability releases for certain former GWG executives. InvestmentNews reports that Goldberg had previously accused them of “corporate looting.”
The proposed settlement underscores the severe losses bondholders face and leaves the door open for continued arbitration against broker-dealers who sold the now nearly worthless investments.
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