Distressed GWG Bondholders Offered Pennies on the Dollar in Proposed Settlement

Nearly three years after GWG Holdings Inc. filed for bankruptcy, investors who purchased $1.6 billion in GWG L bonds are facing substantial losses, with a proposed settlement offering only a fraction of their initial investment.

Formerly, GWG Holdings was a financial services firm and sponsor of non-traded direct investment offerings.

Beneficient, a company spun off from GWG Holdings shortly before its 2022 bankruptcy, has offered $50.5 million to settle claims related to multiple lawsuits, including the bankruptcy proceedings. This offer, if approved by federal judges in Texas, would resolve claims from a class-action lawsuit.

The proposed settlement would allocate approximately $31.48 per $1,000 L bond unit, translating to roughly three cents on the dollar, after deductions. These bonds, titled as such because they were allegedly backed by life settlements, were sold by approximately 40 broker-dealers.

The GWG Litigation Trust, led by trustee Michael Goldberg, is seeking court approval for the settlement with former executives. It includes liability releases following a 2024 complaint accusing executives of “corporate looting.”

Plaintiff attorneys, such as Kal Nekvasil and Bruce Oakes, criticize the settlement, deeming it “virtually nothing” for bondholders. They plan to continue pursuing legal action against the broker-dealers who sold the now-worthless bonds, arguing they recommended unsuitable investments.

Nekvasil said he is representing at least 100 investor claims.

Beneficient, in a statement, emphasized that the proposed settlement resolves all claims without admitting fault and will be funded by insurance policies. Brad Heppner, the company’s chief executive officer, and other senior executives previously held positions at GWG Holdings.

The company’s president and chief executive officer, Murray T. Holland, as well as the company’s chief financial officer and treasurer, Timothy L. Evans, both resigned as executive officers of the company in November 2022.

A key asset in the GWG bankruptcy was 125 million shares of Beneficient, which went public on the Nasdaq in December 2021. Initially trading at $15 per share, Beneficient’s stock has since plummeted, trading at approximately $0.32 per share as of midday on March 13, 2025.

In August 2023, GWG Holdings announced that its reorganization plan had been confirmed by the bankruptcy court. As a result, all securities issued by the company, including common stock, preferred stock and debt securities were cancelled.

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