On June 13, 2025, U.S. Bankruptcy Judge Christopher Lopez of the Southern District of Texas approved a comprehensive settlement package totaling $91.3 million in the GWG Holdings Inc. Chapter 11 bankruptcy proceedings. This landmark decision represents a critical development for the thousands of investors who suffered substantial financial losses when the company collapsed and filed for bankruptcy protection in April 2022.
The approval of these settlements marks the culmination of extensive negotiations and legal proceedings that have spanned several years. For investors who placed their trust and financial resources in GWG Holdings and its investment products, particularly the widely-marketed L bonds, this settlement represents one of the few avenues for potential recovery in what has proven to be a financially devastating situation.
Comprehensive Settlement Framework
Table of Contents
The court-approved settlement represents contributions from multiple parties who were involved in various aspects of GWG Holdings’ operations and oversight. Each component of this settlement addresses different aspects of the alleged misconduct and negligence that contributed to the company’s ultimate collapse.
Directors and Officers Settlement: $50.5 Million
The largest component of the settlement, totaling $50.5 million, comes from GWG Holdings’ former directors and officers. This substantial settlement reflects the significant responsibilities that corporate leadership bears in overseeing company operations and protecting shareholder interests. The settlement addresses allegations that these individuals failed to provide adequate oversight, made material misrepresentations to investors, and engaged in transactions that were not in the best interests of the company or its stakeholders.
However, this portion of the settlement faces an additional hurdle, as it requires supplementary approval from U.S. District Judge Jane Boyle due to related securities class action claims that have been filed against these same directors and officers in federal court. The interconnected nature of these legal proceedings demonstrates the complexity of the litigation surrounding GWG Holdings’ collapse.
Mayer Brown LLP Settlement: $30 Million
Mayer Brown LLP, the law firm that served as legal counsel to GWG Holdings, has agreed to contribute $30 million to the settlement fund. This significant contribution resolves allegations that the firm failed to adequately address conflicts of interest and provide appropriate legal guidance during critical periods of the company’s operations.
The claims against Mayer Brown centered on their role in various transactions and corporate decisions that allegedly contributed to the company’s financial distress. The settlement filed on March 12, 2025, addresses concerns about the firm’s professional responsibilities and the adequacy of their legal advice during pivotal moments in GWG Holdings’ corporate history. Despite the substantial settlement amount, Mayer Brown has not admitted any liability or wrongdoing as part of this agreement.
Whitley Penn LLP Settlement: $8.5 Million
The Texas-based accounting firm Whitley Penn LLP has agreed to pay $8.5 million to resolve allegations related to their audit practices and oversight responsibilities. The claims against Whitley Penn focused on their alleged failure to identify and properly account for related-party transactions, particularly those involving entities controlled by Brad Heppner, a key figure in the complex web of companies associated with GWG Holdings.
The settlement addresses concerns about audit malpractice and the firm’s failure to detect significant issues that may have contributed to investor losses. The allegations suggest that Whitley Penn did not adequately scrutinize the flow of funds between GWG Holdings and related entities, potentially obscuring the true financial condition of the company from investors and other stakeholders. Like other parties to the settlement, Whitley Penn has not admitted any wrongdoing as part of this resolution.
Founders’ Settlement: $2.3 Million
Jon R. Sabes and Steven F. Sabes, the founders of GWG Holdings, have contributed $2.3 million to the settlement fund. While this represents the smallest component of the overall settlement, it is nonetheless significant as it holds the company’s original leadership accountable for their role in the events that led to the bankruptcy.
The settlement with the Sabes brothers addresses their responsibilities as company founders and their involvement in key corporate decisions. All proceeds from this settlement will be directed to the GWG Litigation Trust, which is responsible for managing and distributing recovery funds to affected creditors and investors.
The Complex Web of Corporate Relationships
The GWG Holdings bankruptcy case has revealed a complex network of corporate relationships and transactions that played a central role in the company’s ultimate collapse. Central to many of the allegations are concerns about the company’s relationship with Beneficient, a company controlled by Brad Heppner, and the various transactions between these entities.
The litigation has exposed questions about asset valuations, particularly regarding GWG Holdings’ consolidation of Beneficient and related entities. These valuation issues have been identified as significant factors that may have misled investors about the true financial condition of their investments. The accounting practices surrounding these transactions have been scrutinized extensively, with allegations that they failed to provide accurate and transparent information to investors and regulators.
The flow of funds between GWG Holdings and Heppner-controlled entities has been a particular focus of the litigation. Trustee Michael Goldberg and other parties have alleged that these transactions were not properly disclosed or were structured in ways that disadvantaged GWG Holdings and its investors. The complex nature of these relationships has made it challenging for investors to understand the true risks associated with their investments.
Chapter 11 Bankruptcy Proceedings and Asset Recovery
GWG Holdings filed for Chapter 11 bankruptcy protection in April 2022, seeking to reorganize its debts and operations under court supervision. However, the company’s financial condition proved too severe for a successful reorganization, leading to a focus on asset recovery for the benefit of creditors and investors.
The appointment of Michael Goldberg as trustee of the GWG Litigation Trust has been crucial to the recovery efforts. Goldberg has worked diligently to identify and pursue all available sources of recovery, including the settlements that have now been approved by the court. His efforts have involved extensive investigation into the company’s operations, transactions, and relationships to maximize the funds available for distribution to those who suffered losses.
The trustee’s role extends beyond simply managing the litigation. Goldberg has been responsible for evaluating the strength of various claims, negotiating with potential defendants, and ensuring that any settlements reached provide meaningful recovery for the affected parties. His work has been instrumental in securing the $91.3 million in settlements that have now been approved by the court.
Realistic Recovery Expectations for Investors
While the $91.3 million settlement represents a significant achievement in the recovery process, investors must understand that their expected recovery remains disappointingly low, with bondholders anticipated to receive only approximately 2-3% of their original investments. This limited recovery rate reflects the harsh reality of the company’s financial collapse and the substantial claims against the bankruptcy estate.
The low recovery percentage is attributed to several factors, including the large number of affected investors, the substantial debts and obligations of the company, and the limited assets available for distribution. Even with the approved settlements, the total funds available for distribution fall far short of the losses suffered by investors.
Trustee Goldberg has emphasized that these settlements represent the maximum recovery achievable under the current circumstances. The alternative to accepting these settlements would likely be continued litigation with uncertain outcomes and the additional costs associated with prolonged legal proceedings. Any delays in finalizing and implementing the settlements could potentially reduce the amounts ultimately available to creditors within the next 18-24 months.
Distribution Process and Timeline
The distribution of settlement proceeds will be managed through the GWG Litigation Trust under the supervision of trustee Michael Goldberg. The distribution process will follow established legal priorities and procedures designed to ensure fair treatment of all creditors and claimants.
Before any distributions can be made to investors, the trust must first address administrative expenses, legal fees, and other costs associated with the bankruptcy proceedings and litigation. After these expenses are satisfied, the remaining funds will be distributed to affected creditors according to their legal priority and the amount of their proven claims.
The timeline for distributions will depend on several factors, including the final approval of all settlement components, the resolution of any remaining legal challenges, and the administrative processes required to identify and verify eligible claimants. Investors should expect that the distribution process may take several additional months to complete, even after all settlements are finalized.
Legal Implications and Precedent
The GWG Holdings bankruptcy case and its associated settlements have significant implications for corporate governance, professional responsibility, and investor protection. The case highlights the importance of adequate oversight by directors and officers, proper legal counsel, and thorough audit practices in protecting investor interests.
The settlements with professional service providers, including the law firm and accounting firm involved, underscore the potential liability that these professionals face when their services fall short of expected standards. While none of the settling parties has admitted wrongdoing, the substantial settlement amounts reflect the serious nature of the allegations and the potential risks associated with professional liability claims.
For investors and the broader financial community, the case serves as a reminder of the importance of due diligence, diversification, and understanding the risks associated with complex investment products. The GWG Holdings collapse demonstrates how quickly circumstances can change and how devastating the consequences can be for those who rely on corporate disclosures and professional oversight.
Professional Legal Representation is Essential
Given the complexity of the GWG Holdings bankruptcy proceedings and the various legal issues involved, affected investors should not attempt to navigate this process without experienced legal counsel. The bankruptcy process involves numerous procedural requirements, deadlines, and legal considerations that can significantly impact an investor’s ability to recover funds.
Haselkorn & Thibaut has extensive experience representing investors in complex bankruptcy proceedings, securities litigation, and investment recovery matters. Our attorneys understand the intricacies of these proceedings and can provide the guidance necessary to protect your interests throughout the process.
The firm’s experience in similar cases provides valuable insight into the strategies and approaches that are most effective in maximizing recovery for affected investors. We understand the documentation requirements, the procedural deadlines, and the legal arguments that can make the difference between a successful recovery and a missed opportunity.
Time-Sensitive Considerations
Time is of the essence in bankruptcy proceedings, and delays can have serious consequences for investors seeking to recover their losses. The settlement approval process is ongoing, and various deadlines and procedural requirements must be met to ensure that investors’ rights are protected.
The interconnected nature of the various legal proceedings means that developments in one case can affect others. The need for additional approval of the directors and officers settlement from U.S. District Judge Jane Boyle adds another layer of complexity and potential delay to the process.
Investors who have not yet taken action to protect their interests should do so immediately. The longer investors wait to seek legal counsel and understand their rights, the greater the risk that they may miss important deadlines or fail to take advantage of available recovery opportunities.
Understanding Your Rights and Options
If you invested in GWG Holdings or its L bonds and suffered losses, you may have several options for seeking recovery. The bankruptcy proceedings represent one avenue for recovery, but there may be other legal theories and claims available depending on your specific circumstances.
The securities laws provide various protections for investors who have been harmed by material misrepresentations, omissions, or other misconduct. Depending on how you purchased your investment, when you purchased it, and what information you received, you may have claims under federal securities laws, state securities laws, or other legal theories.
Haselkorn & Thibaut can evaluate your specific situation and help you understand all available options for seeking recovery. Our attorneys will review your investment documentation, analyze the circumstances of your purchase, and determine the best strategy for pursuing your claims.
Contact Haselkorn & Thibaut for Experienced Legal Representation
The GWG Holdings bankruptcy case represents one of the most complex and significant investment recovery matters in recent years. The approved settlements provide some hope for recovery, but navigating the legal process requires experienced counsel who understands the intricacies of bankruptcy law, securities regulation, and investment recovery.
Haselkorn & Thibaut has been fighting for investor rights for years, and we have the experience and resources necessary to help you pursue maximum recovery for your GWG Holdings losses. Our attorneys understand the challenges you face and are committed to providing the aggressive representation you need to protect your interests.
Don’t let procedural deadlines or complex legal requirements prevent you from seeking the recovery you deserve. The bankruptcy process moves quickly, and important deadlines can pass without warning. Taking action now is essential to protecting your rights and maximizing your potential recovery.
Call Haselkorn & Thibaut today at 1-888-885-7162 for a comprehensive consultation about your GWG Holdings investment losses. Our experienced attorneys will review your situation, explain your options, and help you understand the steps necessary to pursue recovery through the bankruptcy proceedings and any other available legal remedies.
Time is running out – contact us today to protect your rights and pursue the recovery you deserve.
Haselkorn & Thibaut – Dedicated to Protecting Investor Rights and Pursuing Maximum Recovery
