GWG Holdings Appears To Be Preparing For Bankruptcy

If you're concerned that a Dallas-based life settlements company is heading toward bankruptcy, you're not alone. GWG Holdings Inc. has been preparing to file for Chapter 11 bankruptcy protection, and it sent a signal to investors last week that it's on the verge of failure. The company hasn't hired a new auditor since Grant Thornton LLP resigned at the end of last year. Meanwhile, GWG has not hired an auditor since January. As a result, it is likely that filing for Chapter 11 bankruptcy protection is next.

Earlier this month, GWG's L Bond investors were notified that it had defaulted on its obligations. The company is now working with outside financial advisors to evaluate its options, which appears to be filing for bankruptcy. It is unclear when this process will be completed, but it's important to note that GWG Bankruptcy has yet to complete its audit of its annual financials.

Although it may appear like a small business, GWG Holdings, Inc. has a $1.7 billion insurance policy portfolio and certain interests in two non-bankrupt companies. Ben LP, which provides financial services to other insurance companies and feeder funds, and FOXO Technologies Inc., which develops technology related to actuarial modeling of life insurance policies. However, there's a lot more to GWG Holdings' financial situation than just filing for bankruptcy.

The company also recently merged with a privately-owned company called Beneficent Co. Group, LP, which issues loans to alternative asset owners. The company then sold L Bonds backed by ownership units in GWG Holdings. The proceeds of this deal were used to invest in alternative assets. But this merger could also lead to GWG Holdings' bankruptcy.

While it is too early to say whether GWG Holdings is on the verge of bankruptcy, the data suggests that the company may be misleading investors about its financial situation. Many investors are filing claims and submitting individual lawsuits with FINRA arbitration. This is why Emerson Equity LLC sold GWG Holdings L securities, but investors should consider contacting an investment fraud lawyer before investing.

Although it is too early to tell whether GWGH is planning to file for bankruptcy, investors should be prepared for the worst. The Dallas-based company has $1.6 billion in outstanding L Bonds. There's no way to predict where these bonds will end up, but according to an anonymous investor who spoke to Investment News, GWG L Bonds could be worth only 20 to 30 cents on the dollar if the company files for bankruptcy.