Item 1.03. Bankruptcy Or Receivership.
Voluntary Petitions for Bankruptcy
On April 20, 2022, GWG Holdings, Inc. (the “Company”)
and certain of its subsidiaries of the Company (such subsidiaries, each a “Debtor,” and together with the Company, the “Debtors”)
filed a voluntary petition for reorganization under chapter 11 of title 11 of the U.S. Code (the “Bankruptcy Code”) in the
Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) (the “Chapter 11 Cases”). The Debtors
are seeking to jointly administer the Chapter 11 Cases under the caption “In re: GWG HOLDINGS, INC., et al.”
at case no. 22-90032. The subsidiaries that are Debtors in the Chapter 11 Cases are GWG Life, LLC and GWG Life USA, LLC.
The Debtors expect to continue their operations
in the ordinary course of business during the pendency of the Chapter 11 Cases. To ensure ordinary course operations, the Debtors have
filed motions seeking orders from the Bankruptcy Court approving a variety of “first day” motions. No trustee has been appointed
and each Debtor will continue to operate its business as a “debtor-in-possession” (DIP) subject to the jurisdiction of the
Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.
Debtor-In-Possession Credit Facility
On April 20, 2022 and prior to the commencement of the Chapter 11 Cases,
the Company negotiated a Superpriority Secured Debtor In Possession Credit Agreement (the “DIP Credit Agreement”) with the
Company and GWG Life, LLC, as borrowers, GWG Life USA, LLC, GWG MCA Capital, Inc., GWG DLP Funding V Holdings, LLC and GWG DLP Funding
V, LLC, as guarantors, National Founders LP, as administrative agent and collateral agent, and each of the other financial institutions
from time to time party thereto (the “Lenders”) pursuant to which, and subject to the satisfaction of certain customary conditions,
including the approval of the Bankruptcy Court, the Lenders have agreed to provide a multiple draw term loan facility in an aggregate
principal amount expected to be approximately $65 million.
The maturity date of the DIP Credit Agreement is expected to be six
months from the filing of the Chapter 11 Cases, and borrowings under the DIP Credit Agreement are expected to bear interest at Base Rate
(as defined in the DIP Credit Agreement) plus 9.0% per annum for a Base Rate Loan (as defined in the DIP Credit Agreement) or Adjusted
Term SOFR (as defined in the DIP Credit Agreement) plus 10.0% per annum for a Term SOFR Loan (as defined in the DIP Credit Agreement).
The DIP Credit Agreement is expected to be secured by substantially all of the assets of the borrowers and the guarantor and will constitute
“Senior Debt” for purposes of the Company’s Amended and Restated Indenture, dated as of October 23, 2017, among the
Company, GWG Life, LLC and Bank of Utah, as trustee (as amended, the “Indenture”). As a result, the L Bonds issued under the
Indenture, which includes the L Bonds, the Seller Trust L Bonds and the Liquidity Bonds, will be subordinated to the obligations under
the DIP Credit Agreement to the extent provided by the subordination provisions of the Indenture.
The DIP Credit Agreement includes conditions precedent, representations
and warranties, affirmative and negative covenants and events of default customary for financings of this type and size. The proceeds
of all or a portion of the DIP Credit Agreement may be used for, among other things, general corporate purposes, including working capital
and permitted acquisitions, administrative costs, premiums, expenses and fees of the transactions contemplated by the Chapter 11 Cases,
for payment of court approved adequate protection obligations and other such purposes consistent with the DIP Credit Agreement.
The Company is seeking Bankruptcy Court approval (at the final hearing
on the DIP Credit Agreement) of an option held by the Lenders (the “DLP VII Option”), under which the Lenders could elect
to effectively refinance in full of the existing secured credit facilities of GWG DLP Funding IV, LLC and GWG DLP Funding VI, LLC to a
new credit facility at (and transfer the entire life insurance policy portfolios to) a newly formed non-debtor special purpose vehicle
(GWG DLP Funding VII, LLC). Exercise of the DLP VII Option would also be expected to result in payment in full of amounts then owing by
the Debtors under the DIP Credit Agreement, thus satisfying the Debtors’ obligations under the DIP Credit Agreement in full and
allowing the Debtors to keep the proceeds of the DIP Credit Agreement to fund expenses in the Chapter 11 Cases, pay employees and other
post-petition service providers.
The foregoing description of the DIP Credit Agreement does not purport
to be complete and is qualified in its entirety by reference to the form of DIP Credit Agreement, a copy of which is attached to this
Current Report on Form 8-K as Exhibit 10.1, and the final terms of the DIP Credit Agreement as may be approved by the Bankruptcy Court.