GWG Holdings Inc., a company known for selling life-insurance bonds, is seeking rescue financing in an effort to avoid bankruptcy after accounting issues and the resignation of its auditor prevented it from selling its products, WSJ Pro Bankruptcy reported. Dallas-based GWG created financial instruments called L Bonds, which pooled money from bond investors to purchase life insurance policies on the secondary market, and then used payouts from the policies when people died to repay the investors. The company sold the bonds through a network of regional broker-dealers, who pitched the products to individual investors, also known as retail investors. GWG’s financial position worsened after the company stopped selling additional L Bonds due to accounting issues that delayed the filing of its 2020 annual report and the resignation of its auditor, according to the people familiar with the matter and disclosures to investors. The company said it missed the Jan. 15 deadline for making $15.6 million in interest and principal payments due to holders of L Bonds. “GWGH relies to a significant extent on L Bond sales to meet our ongoing financial obligations,” the company said in a disclosure to investors on Monday.
