Federal Judge Approves $91.3 Million in Settlements for GWG Bankruptcy
A federal judge has approved a total of $91.3 million in settlement funds from various executives and professional firms involved in the bankruptcy of GWG Holdings Inc. U.S. bankruptcy Judge Christopher Lopez’s recent ruling in Houston paves the way for the distribution of the recovery funds to creditors of the firm, which filed for Chapter 11 bankruptcy protection in 2022.
The largest portion of the newly approved settlements includes $50.5 million from GWG’s former directors and officers, an agreement that AltsWire reported on in March.
Additionally, Judge Lopez approved a $30 million settlement with Mayer Brown, the law firm that served as GWG’s primary legal counsel. While Mayer Brown did not admit liability, the settlement resolves claims of conflicts of interest and alleged failures to provide proper legal advice.
Reports indicate Mayer Brown advised GWG on intricate dealings with Beneficient, a financial services company with which GWG became deeply intertwined through a series of equity investments, loans, and repeated stock swaps. This relationship saw Brad Heppner, Beneficient’s founder and chief executive officer, assume the chairmanship of both companies, with a significant portion of Beneficient’s proceeds from GWG reportedly flowing to entities associated with Heppner.
A further $8.5 million settlement was approved with Texas accounting firm Whitley Penn. The litigation trust had identified potential claims of audit malpractice against Whitley Penn, citing alleged failures in identifying Heppner-controlled entities as related parties, valuation issues, and accounting practices leading to GWG’s consolidation of Beneficient. Whitley Penn also made no admission of wrongdoing in its settlement.
Finally, a $2.3 million settlement was approved with brothers Jon R. and Steven F. Sabes, the original founders of GWG.
Michael Goldberg, the trustee of the GWG Litigation Trust, is charged with recovering funds for GWG’s creditors. Goldberg had previously alleged in court documents that the law firm, auditor, and certain directors had not acted in the best interests of the company.
Prior to its bankruptcy, GWG Holdings Inc. had sold approximately $1.6 billion in GWG L bonds, which were backed by life settlements, through about 40 broker-dealers. These bonds were sold in $1,000 units, and the proceeds from these settlements will now be directed to the litigation trust to distribute to the affected creditors.
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