As expected, GWG Holdings Inc., which sold $1.6 billion in bonds backed by life settlements through a network of independent broker-dealers, said it has voluntarily filed for Chapter 11 bankruptcy protection.
The company made the announcement Wednesday morning on its website. The market has been anticipating the measure for more than two weeks; the company has struggled of late and repeatedly missed the deadline to file audited financial statements in the past couple of years.
In January, it failed to make $13.6 million in combined interest and principal payments for its L Bonds series, ultimately defaulting on those bonds.
Investors in the $1.6 billion of bonds could face dire consequences from the GWG bankruptcy; one GWG investor, who asked not to be named, earlier this month said he estimated the L Bonds are worth 20 cents to 30 cents on the dollar.
In its statement, GWG Holdings said that it had secured $65 million in debtor-in-possession financing to facilitate the restructuring, subject to court approval. Its filing was made in U.S. Bankruptcy Court for the Southern District of Texas.
This story is developing.
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