GWG Holdings secures confirmation of fully-consensual Chapter 11 plan

By Sarah Lizee

Olympia, Wash., June 16 – GWG Holdings, Inc.’s Chapter 11 plan has been confirmed, according to a minute entry filed Thursday with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, the company reached a settlement in March with the official committee of unsecured creditors and L Bond Management LLC following extensive mediation. The settlement forms the basis of the amended plan.

The plan was accepted by all voting classes. Specifically, 11,646 holders, or 99.19% in number, of $1.03 billion, or 99.43% in amount, of bond claims voted to accept the plan, while 95 holders, or 0.81% in number, of $5.92 million, or 0.57% in amount, voted to reject the plan.

Meanwhile, four holders, or 80% in number, of $307,230.63, or 100% in amount, of general unsecured claims voted to accept the plan, while one holder, or 20% in number, of $1.00, or 0% in amount, voted to reject the plan.

And, 392 holders, or 98% in number, of 13,638.99 shares, or 98.24% in amount, of series I preferred interests voted to accept the plan, while eight holders, or 2% in amount, of 245 shares, or 1.76% in amount, voted to reject the plan.

Also, 579 holders, or 97.8% in number, of 29,416.09 shares, or 92.33% in amount, of series 2 preferred interests voted to accept the plan, while 13 holders, or 2.2% in number, of 2,445 shares, or 7.67% in number, voted to reject the plan.

Lastly, 255 holders, or 94.44% in number, of 2,051,757 shares, or 44.69% in amount, of existing common stock voted to accept the plan, while 15 holders, or 5.56% in number, of 2,539,054, or 55.31% in amount, voted to reject the plan.

The plan will provide for the debtors to be liquidated and for the creation of a wind-down trust and a litigation trust. Both trusts are set to last three years, subject to extensions.

Under the plan, holders of other secured claims and other priority claims are expected to receive 100% recovery.

Bondholders will receive, on account of their bonds (including interest accrued on the bonds through April 20, 2022), senior-most interests in the wind-down trust. The series 1 wind-down interests will entitle each bondholder to future cash distributions resulting from the monetization of the assets of the wind-down trust and the litigation trust.

If available, bondholders might also receive a small cash payment on or around the effective date of the plan.

The estimated allowed claim pool amount for bond claims is about $1.67 billion.

The estimated recovery for bond claims is 9% to 100%, and the estimated recovery for LBM L bond claims is 7.7% to 100%.

Holders of general unsecured claims will receive their pro rata share of series B wind-down trust assets. This is expected to lead to a recovery of 8.5% to 21.9%.

Holders of general unsecured creditor convenience claims will receive either payment in full in cash for their unpaid portions of the claims or other treatment leaving the claims unimpaired.

Holders of DLP entity general unsecured claims will receive payment in full in cash.

Other than the policy portfolio equity interests, which will be transferred to the wind down trust, any debtor’s claim against any other debtor will be deemed satisfied except to the extent necessary to effectuate the other terms of the plan.

Intercompany interest will be deemed canceled.

Holders of series 1 and series 2 preferred interests will receive their pro rata share of new series C and series D wind-down trust interests, respectively. This isn’t expected to result in any recovery.

Holders of common stock will receive their pro rata share of new series E wind-down interests.

GWG is a life insurance company based in Dallas. The company filed bankruptcy on April 20, 2022 under Chapter 11 case number 22-90032.

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