FAQs
Q&A – D&O and Other Settlements
I received copies of documents from the Court. What does this mean to me as an interest holder of the GWG Wind Down Trust?
The GWG Litigation Trust reached settlements with a number of parties and is seeking the bankruptcy court’s approval of those settlements. The GWG Litigation Trustee is seeking approval of settlements in the following lawsuits:
- Heppner Adversary Proceeding: The Litigation Trustee filed suit against Brad Heppner, Brad Heppner related entities, certain former GWG officers and directors, and Beneficient (the “Heppner Adversary Proceeding”). The proposed settlement provides for settlement with all Defendants except for trusts and other entities affiliated with Brad Heppner. The proposed settlement amount is $50.5 million.
- Whitley Penn Proceeding: Whitley Penn was one of GWG’s former auditors. The proposed settlement amount is $8.5 million.
- Sabes Adversary Proceeding: GWG’s former CEO Jon Sabes, his brother, and several entities associated with the Sabes. The proposed settlement amount is $2.3 million.
- Mayer Brown LLP: Mayer Brown served as GWG’s former counsel. Following a mediation that occurred prior to litigation being filed, the Litigation Trustee and Mayer Brown agreed to a settlement of $30 million.
WDT Interest holders are receiving notice of the settlements so that they are informed about the settlements. If WDT Interest holders choose, they can file objections with the Court. Any objection to the settlement in the Heppner Adversary Proceeding must be filed with the Bankruptcy Court on or before April 2, 2025. Any objection to the other settlements must be filed with the Bankruptcy Court on or before April 7, 2025.
There are two hearing settings with regards to the settlement motions.
Heppner Adversary Proceeding – April 11, 2025 at 10:00 a.m. CT,
Whitley Penn, the Sabes Defendants, and Mayer Brown – April 16, 2025 at 2:30 p.m. CT
The hearings will take place in Judge Isgur’s courtroom, Courtroom 404, 515 Rusk, Houston, Texas 77002. Parties may also observe or participate by telephone and video conference. The Court’s system requires dialing in on the telephone for audio. You log in via video to watch the proceeding.
Sound – The Court’s phone number is 832-917-1510. Once connected, you will be asked to enter the conference room number. Judge Isgur’s conference room number is 954554. Please note that this is a live line. Unless you are speaking to the Court, please put your phone on mute.
Video – The Court uses the GoToMeeting platform. Connect via the free GoToMeeting application or click the link on Judge Isgur’s home page. The meeting code is “JudgeIsgur.”
If the settlements receive court approval, the net settlement proceeds (after paying expenses, fees, and establishing a litigation reserve) will be given to the Wind Down Trust. The Wind Down Trust will then distribute those funds in accordance with GWG’s bankruptcy plan.
Why is this settlement the best outcome for the GWG Wind Down Trust and the underlying interest holders?
The Litigation Trustee’s position is described in the motions for settlement approval that you received and that are available on the Trust website. The Litigation Trustee believes that the proposed settlements are fair and in the best interest of the WDT Interest holders.
The Litigation Trustee stands strongly behind the claims that have been or could be asserted. However, the Trustee must balance the strength of the claims against legal and practical considerations. The claims are complicated and the facts are very complex. The Defendants have and would vigorously defend the claims. Litigating the claims would be expensive, time consuming, and prevailing at trial is not certain. It could take many years to litigate judgment and manage an appeal process that would likely follow. The Defendants would be spending resources that could be collected to pay WDT Interest holders. The Litigation Trustee also evaluated and considered the likelihood that the Litigation Trust could successfully collect a judgment against certain of the settling defendants, especially individual defendants.
The Litigation Trustee weighed these litigation and collection risks against the proposed settlements. In the Litigation Trustee’s judgment, these settlements are in the best interests of the WDT Interest holders because they allow for a distribution in short order. They also preserve claims against Heppner-affiliated entities and trusts (known and unknown) that received funds originating from GWG.
* The Litigation Trustee will continue pursuing claims against other defendants (such as the Reserved Trust Action Defendants, defined below, Foley & Lardner LLP and Holland & Knight LLP).
Who are the non-settling defendants parties remaining in the Heppner Adversary Proceeding?
The “Reserved Trust Action Defendants” include: The Bradley K. Heppner Family Trust; The Heppner Family Home Trust; The Highland Business Holdings Trust; The Highland Investment Holdings Trust; Beneficient Holdings, Inc.; Bradley Capital Company, L.L.C.; Elmwood Bradley Oaks, L.P.; The Highland Investment Holdings Trust; Timothy B. Harmon, solely in his capacity as trustee of The Highland Investment Holdings Trust; HCLP Credit Company, L.L.C.; HCLP Nominees, L.L.C.; Highland Consolidated, L.P.; and Research Ranch Operating Company, L.L.C.
The Litigation Trustee believes the Reserved Trust Action Defendants received over $140 million in funds traceable to GWG.
* The Litigation Trustee will continue pursuing claims against the Reserved Trust Action Defendants. Assets of these defendants include an interest in the Bradley Oaks Ranch.
Are there any more funds available under the D&O policies?
The D&O policies likely will be exhausted as a result of the settlement in the Heppner Adversary Proceeding. By early December 2024, only at most $77–$80 million in coverage remained on the D&O policies. If approved, $50.5 million will be paid to the Litigation Trust as settlement consideration, with the balance set aside to pay defense costs for certain ongoing legal proceedings involving the settling defendants. If more than $250,000 from the D&O policies remain after the conclusion of certain legal proceedings involving the settling defendants, the remaining amount will be paid to the Litigation Trust.
What is the total amount to be received from the settlements?
As set forth in the table below, the Litigation Trustee estimates that approximately $59.8 million will be distributed from the Litigation Trust to the Wind Down Trust, if the settlements are approved. Other than the notice costs identified in the table below, no WDT expenses will be deducted from the amount prior to distribution to WDT Interest holders.
How much money will I receive from these settlement proceeds?
It is too soon to determine how much holders of WDT Interests will receive from these settlements. There are several potentially large claims against the Debtors that are not yet resolved, which could materially impact how proceeds from the settlements are distributed to WDT Interest Holders. Although the Wind Down Trust and Litigation Trust have made significant progress in the claims reconciliation process, that process is still ongoing.
The Wind Down Trust will post an update to this FAQ upon a determination of the distribution, including the anticipated distribution amount.
How soon will I receive distribution from these settlement proceeds?
We do not know yet when the WDT Interest holders will be paid. Several things need to occur before distributions are made. First, the Court will enter an order approving any settlement. Each of the settlement agreements has different terms that provide when the Litigation Trust will receive payment. The Heppner Adversary Proceeding also resolves the Class Action. Payment related to that settlement will follow approval of the settlement not only by the Bankruptcy Court but also by the District Court where a Class Action is pending. The process for seeking approval by the District Court is underway.
The GWG Wind Down Trust will post an update to this FAQ after the Bankruptcy Court rules on the requests to approve the settlements. An update will also be provided regarding the District Court approval process. This update will include the anticipated date for payment to the WDT Interest holders
1 The proposed settlement of claims asserted in Goldberg v. Heppner, et al., Adv. Pro. No. 24-03090, also resolves claims in a parallel putative securities class action pending in the U.S. District Court for the Northern District of Texas (the “District Court”), styled In re GWG Holdings, Inc. Sec. Litig., No. 3:22-cv-00410 (the “Class Action”). Under the terms of that settlement agreement, Class Counsel will apply to the District Court for a fee payment in an amount not to exceed $8,484,000 plus reimbursement of expenses in an amount not to exceed $500,000. [Dkt No. 2533-1 at ¶ 22].
2 This amount represents a reserve by GWG Litigation Trustee to fund reasonably anticipated expenses associated with multiple pending arbitrations and adversary proceedings, in accordance with the terms of the GWG Litigation Trust Agreement. See Dkt No. 1910 at §3.4.
3 The GWG Litigation Trustee’s compensation under the GWG Litigation Trust Agreement includes a success fee comprised of (a) 2% of the net amount available for distribution to the Wind Down Trust Beneficiaries plus (b) 2% of the amount of any fees and expenses paid to any experts and/or contingency counsel retained by the Litigation Trustee on behalf of the Litigation Trust (“Success Fee”). See Dkt No. 1910 at Schedule A. At the time a Success Fee is paid, 50% of all monthly compensation paid or payable to the Litigation Trustee is credited against any Success Fee. Id. Because this credit depends on when the Settlements are approved and ultimately fund, this amount is based on the Litigation Trustee’s best current estimate as to the timing of each and therefore may be subject to change. Further, for the settlement with the D&O Defendants [Dkt No. 2533], the Success Fee is calculated solely on the portion of the settlement allocated to the GWG Litigation Trust (52%), net of fees owed to the Litigation Trustee’s counsel; it excludes amounts allocated to settle the Class Action.
First Distribution
When can I expect to receive a distribution (payment) under the GWG Wind Down Trust?
At this time, we have not determined when any distribution to the of the holders of New WDT Interests will be paid. This is due to the various factors such as the realization of net proceeds from the prosecution of the retained causes of action by the Litigation Trust. The GWG Wind Down Trust will post an update to this FAQ upon a determination of the distribution based upon cash requirements of the GWG Wind Down Trust, including the anticipated payment date.
Grantor Letters
What is the tax impact for 2023 and subsequent years or will it take place in the future when the Wind Down Trust is complete? Neither the Trustee nor the Trust’s financial advisors provide tax advice. Each interest holder should seek counsel from their respective tax advisors.
As the GWG Wind Down Trust is a grantor trust, the Trust’s professionals and accountants are in the process of preparing the Trust’s 2024 tax return. The Trust will mail Grantor Letters to all direct Series A1 WDT Interest Holders If your Interests are held indirectly through your broker, the information will be posted through the LENS and FIS tax clearing portals for access by your broker and/or custodian. We will post the generic form to the Financial and Taxes webpage when completed. If you are a direct holder and do not receive a letter from Computershare, you or your registered financial advisor can access the letter through your Computershare account.
Status of Trust
What is the status of the Trust as to the liquidation of the assets?
As of January, 2025, the Wind Down Trust continues to attempt to liquidate remaining assets while awaiting the outcome of Litigation being undertaken by the GWG Litigation Trust. As recoveries are received by the Litigation Trust, the net proceeds of litigation will be available for distribution to the interest holders in the GWG Wind Down Trust.
Due to the various factors such as the realization of proceeds from the liquidation of Beneficient stock and actual receipts from the prosecution of the retained causes of action by the Litigation Trust, we have not determined the potential return to the Trust for the benefit of the WDT Interest Holders. There are many unknown factors at this time and until the last case is litigated to a resolution, the total potential amount to be realized remains unknown, although the Trust believes that a full recovery is unlikely.
Transfers of Interest
Beneficiaries of a deceased Interest Holder (WDT Interests Directly Held at Computershare).
General requirements for deceased transfers are:
- Certified copy of death certificate;
- Affidavit of domicile;
- Court appointment papers, if any; and/or
- Completed transfer documents with medallion signature guaranty.
The following letter and accompanying forms must be read and completed and mailed or delivered to Computershare at the address included in the letter. Computershare will process the package for approval by the Trustee’s office. Once approved, Computershare will complete the transfer. Please call Computershare for any questions you may have as to the form or process.
For completion of the forms, please insert “Interests” and mark off “shares” on Computershare’s standard forms as the New WDT Interests are not securities. This is a unique case and not standard Transfer Agent practice.
[Please click link for forms provided below.]
02YV6A_WEB_AIP_US_DECEASED_Letter_WEB_8-28-19_00E4NA_TR_Surviving_Tenant.qxd (computershare.com)
Can I sell or transfer my WDT Interests to third party?
Other than with limited exceptions, WDT Interests cannot be transferred or sold. The WDT Interests are not redeemable securities. The WDT Interests are a beneficiary interest in the GWG Wind Down Trust, representing your allowed claim in the Bankruptcy case of GWG Holdings, Inc. On the Effective Date, all existing securities issued by GWG, including GWG’s common stock, preferred stock and debt securities (including all L Bonds) were cancelled and were replaced with New WDT Interests. All terms of GWG’s cancelled securities, including with respect to the circumstances under which such securities could be transferred, are no longer operative. The terms governing the transfer of New WDT Interests are set forth in the Plan and the Trust Agreement.
In accordance with Article IV.J of the Plan and Section 2.4(a) of the Trust Agreement, the New WDT Interests are not transferrable generally, except by will, intestate succession, or otherwise by operation of law. There are additional restrictions upon transfer of New WDT Interests which are set forth in the Trust Agreement.
If the WDT Interests are held within an IRA or 401k that is terminating, the holder may then hold the WDT Interests directly or through a broker as long as the holder does not change. In order to effect either of these changes, the holder must fill out the below [form]:
For completion of the forms, please insert “Interests” and mark off “shares” on Computershare’s standard forms as the WDT Interests are non-securities. This is a unique case and not standard Distribution Agent and Transfer Agent practice.
[Link for forms provided below.]
https://cda.computershare.com/Content/eebf23ce-cda3-445f-87a6-065b60248319 (U.S.)
https://cda.computershare.com/Content/324aa5d2-1832-4313-bb6a-3cac10fd96a0 (International)
For WDT Interests held indirectly through the broker and/or custodian, please note that the Depository Trust & Clearing Corp. (“DTC”) has escrowed the WDT Interests for the purpose of receiving distributions under the Plan, and has strict limitations as to the allowance of transfers. Please submit a copy of any transfer request to the DTC completed by your broker to inquiry@gwgholdingstrust.com so that the Trust has the most updated information pertaining to the WDT Interest holder.
Asset Values
As the GWG WDT Interests are non-securities, no value will show on your statement. For tax and other purposes, please see Asset Values webpage.
Objection to Claims/Claimant Letters
Deadline to object to claims has been extended until April 30, 2025.
Elizabeth Freeman, the GWG Wind Down Trustee, has been working to resolve outside of the Bankruptcy Court, the outstanding claims that may be subject to objection based on filing of the claim as to fraud, class action, secured or priority classification, claim amount or unliquidated amount. On May 14, 2024 and June 24, 2024, the Trustee mailed letters to bondholders, claimants and shareholders that filed Proofs of Claims. Without resolution as to the unsecured claim classification and validation of the WDT Interests issued representing the claim amount in the bankruptcy case of GWG Holdings, Inc., the Trustee may have no alternative but to file an objection as to the unresolved claim if resolution is not completed prior to April 30, 2025.
If you have not signed the Claimant Letter or have filed a claim, but have not received a letter, please contact the Trustee by email at inquiry@gwgholdingstrust.com or by phone at (713) 654-5150 to discuss resolution of your claim to avoid the filing of an objection to your claim. This includes any claim for misrepresentation, fraud, putative or class actions.
Address Changes
Where do I make changes to my account?
Direct Holders
Changes should be directed through Computershare. The Trustee’s office can help with address changes if you have any issues, but all address changes will need to comply with Computershare’s verification requirements. Address changes can only be processed for individuals/holders who hold their interests directly without a broker or custodian. Similarly, any changes to a direct holder’s banking must be directed through Computershare.
The Trustee’s office can assist when you have issues with registering with Computershare but cannot do the registration process for you. You must contact Computershare with any questions or issues to first resolve them at 1-866-595-6048, option 1 (U.S.). The Trustee’s office does not have access to the registration process nor can the Trustee’s office make any changes to your account.
Indirect Holders (Broker or Custodian through DTC)
Any change requests by holders holding their New WDT Interests in an account with a broker or custodian through the facilities of The Depositary Trust Company (“DTC”) must be directed to such broker or custodian. Please email inquiry@gwgholdingstrust.com to ensure that the GWG Wind Down Trust has your new address of record. If you have subscribed to Stretto for noticing purposes with the Bankruptcy Court, please email Stretto at TeamGWG@stretto.com.
Fifth Season Settlement Impact
What is the impact of the settlement with Fifth Season as to the Trust?
The settlement agreement with Fifth Season consists of allowance of an $8 million administrative claim. This claim must be paid in full prior to distributions to pre-petition claimants, including WDT Interest holders.
Please see Status Report of the preceding quarter on Joint Status Reports webpage as to current status.
Calculation of WDT Interests
On June 20, 2023, the Bankruptcy Court confirmed the Debtors’ chapter 11 plan (the “Plan”). A copy of the Plan and the order confirming the Plan can be found at the following: Order Confirming Plan
On August 1, 2023, the Plan became effective (the “Effective Date”). On the Effective Date, in accordance with the Plan, all existing securities issued by GWG, including GWG’s common stock, preferred stock and debt securities (including all L Bonds) were cancelled and were replaced with interests (“New WDT Interests”) in a trust created to liquidate the Debtors’ assets called the GWG Wind Down Trust. As of August 1, 2023, GWG Holdings, Inc. no longer operates as a business. The corporation was dissolved on or about January 15, 2024. The WDT Interests as described below are not securities and are not transferable or to be sold, except for the allowed transfers detailed in FAQ #7.
A summary* of the conversion+ of “Allowed#” claims to New WDT Interests is as follows:
L Bond Claims: One (1) Series A1 WDT Interest for each dollar of L Bonds outstanding (i.e., principal, and accrued and unpaid pre-petition interest beginning December 1, 2021, on such L Bond as of April 20, 2022). An example of the conversion of the 50,000 bond may reflect as 51,448 of Series A1 WDT Interest on the Computershare account statement and website. This is an example only, not actual.
General Unsecured Claims: One (1) Series B WDT Interest for each dollar of allowed General Unsecured Claim.
Series 1 Preferred Stock: 1,000 Series C WDT Interests for each share of Series 1 Preferred Stock.
Series 2 Preferred Stock: 1,000 Series D WDT Interests for each share of Series 2 Preferred Stock.
Common Stock: One (1) Series E WDT Interest for each share of GWG common stock.
* This summary is provided for information purposes only. Please refer to the Plan and Confirmation Order for complete information.
+ In accordance with the Plan, in the event the calculations resulted in the issuance of a fractional number of New WDT Interests, the actual distribution of such New WDT Interests was rounded as follows: (a) fractions of one-half (1/2) or greater were rounded to the next higher whole number; and (b) fractions of less than one-half (1/2) were rounded to the next lower whole number.
# Only claimants holding “Allowed” claims are entitled to the distributions set forth below under the Plan.
GWG WDT Interests Location
Computershare is the Transfer Agent of the GWG Wind Down Trust. The securities holder data for those accounts held directly by former GWG Holdings, Inc. investors, as of August 1, 2023 was transferred from GWG Holdings, Inc. to Computershare for the purpose of making position data accessible to all direct holders of Series A1, Series A2, Series B, Series C, Series D and Series E New WDT Interests. It is optional to register with Computershare to access your account. It is not required. However, the Trustee recommends registration so as to streamline the distribution process.
If your GWG Holdings, Inc. investments were held through your broker and/or custodian at the time of the bankruptcy filing, the data remains held by the broker and/or custodian through the assigned CUSIP. The CUSIP is escrowed through the Depository Trust & Clearing Corporation (“DTC”). Neither Computershare nor the GWG Wind Down Trust has access to the WDT Interest accounts held indirectly through brokers. However, you should be able to view your GWG WDT Interests on your brokerage statement. If you do not see the interests on your brokerage statement, please contact your financial advisor.
The Computershare advisor portal for GWG Wind Down Trust was established on September 14, 2023. Any questions related to the advisor portal should be directed to Computershare. The Trustee’s office will not have any access to the portal nor be able to answer any questions related to the portal.
Additionally, if the advisor is not listed under your account with Computershare, please complete the linked form for the advisor to gain access.
[Link for form provided below.]
Sale of Insurance Portfolio
Following the Plan Effective Date, the WDT Trustee commenced a marketing process for the sale of the Policy Portfolio. The WDT Trustee established a data room, entered into eleven non-disclosure agreements with potentially interested parties, and ultimately received proposals from two bidders.
The WDT Trustee evaluated the proposals, taking into account the net cash to the Wind Down Trust, the financial wherewithal of the proposed purchaser, the timing for a proposed closing, the proposed transaction structure, the completion of the portfolio diligence by the bidders, the reduction in operating costs to the Wind Down Trust, and the willingness of the Exit Facility/Lender to provide the required consents and amendments for an assumption of the Exit Facility.
Following a thorough evaluation process, the WDT Trustee elected to sell the entire Policy Portfolio (through selling the Wind Down Trust’s limited liability interests in Portfolio Co.) in exchange for $10 million and the purchaser’s assumption of the existing Exit Facility/Loan. Closing occurred on October 13, 2023.
For further information as to the Motion, Order and Notice of Closing of the Portfolio Sale, please click on the links below:
Emergency motion to approve life insurance portfolio sale