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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, DC
20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of
Report (date of earliest event reported):
June 20, 2022
GWG Holdings, Inc.
(Exact
name of registrant as specified in its charter)
Commission
File Number:
001-36615
|
Delaware |
|
26-2222607 |
(State
or other jurisdiction
of incorporation) |
|
(IRS
Employer
Identification No.) |
325 North St. Paul Street,
Suite 2650,
Dallas,
TX
75201
(Address
of principal executive offices, including zip code)
(612)
746-1944
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former name or former address, if changed since
last report)
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
|
☐ |
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR
230.425) |
|
☐ |
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) |
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)) |
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of each class |
|
Trading Symbol(s) |
|
Name of
each exchange on which registered |
|
Common Stock |
|
GWGHQ |
|
* |
|
* |
On May
18, 2022, Nasdaq Stock Market LLC filed a Form 25 delisting and
deregistering the shares of common stock, par value $0.001 per
share, of GWG Holdings, Inc. from The Nasdaq Stock Market, which
became effective ten days after the filing of the Form 25. GWG
Holdings, Inc.’s common stock began trading exclusively on the
over-the-counter market on April 29, 2022 under the symbol
GWGHQ. |
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§230.405 of
this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
Emerging
growth company ☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ☐
Item
1.01 Entry into a Material Definitive Agreement
The
information set forth in Item 5.02 of this Current Report on Form
8-K under the headings “Appointment of Additional Independent
Directors; Formation of Board Committees” and “Appointment of Chief
Restructuring Officer” is hereby incorporated by reference in this
Item 1.01.
Item
5.02 Departure of Directors or Certain Officers; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers
Appointment of
Additional Independent Directors; Formation of Board
Committees
On June 20, 2022, the Board of Directors (the “Board”) of GWG
Holdings, Inc. (the “Company”) duly appointed two new independent
directors to the Board, Anthony R. Horton and Jeffrey S. Stein, in
accordance with the Company’s Amended and Restated Bylaws. Each of
Mr. Horton and Mr. Stein have substantial experience serving as
directors of entities that are in proceedings under chapter 11 of
title 11 of the United States Code (the “Bankruptcy Code”), such as
the voluntary cases (the “Chapter 11 Cases”) filed by the Company
and certain of its subsidiaries (the “Debtors”) in the United
States Bankruptcy Court for the Southern District of Texas (the
“Bankruptcy Court”). Mr. Horton was appointed to serve as a Class
III director and Mr. Stein was appointed to serve as a Class I
director. There are no arrangements or understandings between
either Mr. Horton or Mr. Stein and any other person pursuant to
which they were appointed to the Board, other than the agreements
between the Company and Messrs. Horton and Stein described in this
Current Report on Form 8-K. Neither Mr. Horton nor Mr. Stein has
any direct or indirect material interest in any transaction
required to be disclosed pursuant to Item 404(a) of SEC Regulation
S-K.
In
connection with their appointment to the Board, each of Messrs.
Horton and Stein entered into an Independent Director Agreement
with the Company. The Independent Director Agreements have a term
expiring upon the earlier of (i) the effective date of a plan of
reorganization for the Debtors pursuant to the Bankruptcy Code that
has been filed and confirmed with the Bankruptcy Court and (ii) the
dismissal of the Chapter 11 Cases (the “Expiration Date”). Messrs.
Horton and Stein shall be entitled to cash payments of $35,000 per
month during the term of their respective Independent Director
Agreement, prorated for partial month service; provided, that each
of Messrs. Horton and Stein shall be entitled to a minimum of
$210,000 in aggregate fees from the Company during the term of
their respective Independent Director Agreement; and provided
further, that Mr. Stein shall not be entitled to compensation for
service as an independent director while he is serving as Chief
Restructuring Officer of the Company, as described below. Messrs.
Horton and Stein are also entitled to reimbursement for reasonable
business related expenses incurred in good faith in the performance
of their duties for the Company.
The Independent Director Agreements include indemnification,
contribution and expense advancement provisions that are customary
for agreements of this nature. The indemnification, contribution
and expense advancement benefits provided under the Independent
Director Agreements are in addition to the indemnification and
expense advancement provisions provided for in the Company’s
Certificate of Incorporation and Amended and Restated Bylaws. The
foregoing description of the Independent Director Agreements is
qualified in its entirety by the terms of such agreements, which
are filed as exhibits to this Current Report on Form 8-K and
incorporated herein by reference.
In
connection with their appointment as independent directors, Messrs.
Horton and Stein each were appointed to two newly created
committees of the Board, the Investigations Committee and the
Special Committee. David F. Chavenson, an existing independent
director, was also appointed to the Special Committee.
The
Investigations Committee has the exclusive authority of the Board
to (i) investigate any transaction, group of related transactions
or other relationship (each a “Transaction”) between the Company or
any of its subsidiaries and any third party that occurred at any
point prior to the filing of the Chapter 11 Cases; (ii) prepare a
report regarding the results of its investigation to be provided to
the full Board, including its conclusions regarding whether any
potential claims or causes of action should be brought regarding
any Transaction; (iii) engage advisors, including outside legal
counsel selected by the Investigations Committee, to assist the
Investigations Committee in discharging its duties; and (iv) bring
any claims or causes of action regarding any Transaction described
in its report with outside legal counsel engaged by the
Investigations Committee.
The
Special Committee has the exclusive authority of the Board to (i)
adopt any new compensation arrangements for officers of the Company
in connection with the Chapter 11 Cases (a “Key Employee Plan”);
(ii) evaluate the terms and conditions of the Shared Services
Agreement, dated as of May 27, 2020 and effective as of January 1,
2020, between the Company and The Beneficient Company Group, L.P.
(together with its subsidiaries, “Ben”) (the “Shared Services
Agreement”), and the performance by the Company and Ben thereunder,
relating to the period following the commencement of the Chapter 11
Cases, and any actions that may or should be taken by the Company
with respect to the amendment or termination of the Shared Services
Agreement and, with legal counsel engaged by the Company, the
assertion of any claim or cause of action thereunder, and to
prosecute and settle any such claim or cause of action; (iii)
evaluate the terms and conditions of any transaction between the
Company or any of its subsidiaries and any officer or director of
the Company (other than the Independent Director Agreements of the
Consulting Agreement (as defined below)) that presents an actual or
potential conflict of interest between the Company and such officer
or director (a “Potential Conflict Transaction”); and (iv) exercise
general oversight of all proceedings and activities of the Company
related to any Key Employee Plan, the Shared Services Agreement and
any Potential Conflict Transaction.
The
Special Committee also has the authority to (the following being
referred to as the “Special Committee Chapter 11 Actions”) (i)
evaluate the terms and conditions of (a) any debt financing
proposal to be submitted to the Bankruptcy Court for approval in
connection with the Chapter 11 Cases, or (b) the sale of all or a
portion of the Company’s and its subsidiaries’ portfolio of life
insurance policies or the sale of any of its other assets,
including a sale of all or substantially all of the Company’s
interests in Ben; and (ii) evaluate the terms and conditions of any
plan of reorganization to be submitted by the Debtors to the
Bankruptcy Court for confirmation. Any action by the Board to
approve any agreement or instrument effecting any Special Committee
Chapter 11 Action shall require that the Special Committee, by
unanimous vote of all of its members, shall not have objected to
any such agreement or instrument. The Special Committee also shall
have the authority to evaluate the terms and conditions of any
proposed transaction by Ben or FOXO Technologies, Inc. to become a
public company by merger with a special acquisition corporation and
report its findings, including any recommendation, to the
Board.
Resignation of
Peter T. Cangany, Jr.
Immediately prior to
the appointment of Messrs. Horton and Stein as independent
directors of the Board on June 20, 2022, Peter T. Cangany, Jr.
resigned as a director of the Company. Mr. Cangany informed the
Board that his resignation was to address any perceived conflicts
by his service on the Board and his service on the board of
directors of the general partner of Ben. The Company believes that
eliminating any perceived conflicts will assist Ben in continuing
to implement its business plan, thereby enhancing the value of the
Company’s investments in Ben. The resignation of Mr. Cangany was
not due to any disagreement with the Company known to an executive
officer of the Company on any matter relating to the operations,
policies or practices of the Company.
Appointment of
Chief Restructuring Officer
On June 20, 2022, the Board also appointed Mr. Stein, age
52, as the Company’s
Chief Restructuring Officer, to report to the Board and Murray T.
Holland, Chairman, President and Chief Executive Officer of the
Company. In connection with the appointment of Mr. Stein as the
Chief Restructuring Officer, the Company and Mr. Stein entered into
a Consulting Agreement, dated as of June 1, 2022 (the “Consulting
Agreement”). The Consulting Agreement may be terminated by either
party upon 30 days’ prior written notice.
Mr. Stein is Founder and Managing Partner of Stein & Holly
Inc., a financial advisory firm that provides consulting services
to public and private companies and institutional investors.
Previously, Mr. Stein was a Co-Founder and Principal of Durham
Asset Management LLC, a global event-driven distressed debt and
special situations equity asset management firm. From January 2003
through December 2009, Mr. Stein served as Co-Director of Research
at Durham responsible for the identification, evaluation and
management of investments for the various Durham portfolios. From
July 1997 to December 2002, Mr. Stein served as Co-Director of
Research at The Delaware Bay Company, Inc., a boutique research and
investment banking firm focused on the distressed debt and special
situations equity asset classes. From September 1991 to August
1995, Mr. Stein was an Associate and Assistant Vice President at
Shearson Lehman Brothers in the Capital Preservation&
Restructuring Group. Mr. Stein currently serves as a director on
the board of Ambac Financial Group, Inc., where he serves as
Chairman, and as a board observer on the board of TORM plc. Mr.
Stein previously served as a director on the boards of Intelsat
Connect Finance S.A., NMC Health plc, Westmoreland Coal Company and
Dynegy Inc. Mr. Stein received a B.A. in Economics from Brandeis
University and an M.B.A. with Honors in Finance and Accounting from
New York University.
Pursuant
to the terms of the Consulting Agreement, Mr. Stein, in his
capacity as Chief Restructuring Officer, has been engaged to, among
other things, (i) review the financial and operational details of
the Company to be able to assist in the formulation of a
restructuring plan; (ii) assist in formulating and developing with
the Board the Company’s refinancing/restructuring options that are
intended to be value accretive to the Company and maximize the
value of the Company’s assets for the benefit of the Company’s
stakeholders; (iii) assess options to optimize the Company’s
capital structure; (iv) manage and implement the restructuring
plan(s) of the Company and its subsidiaries; (v) explore, assess,
and recommend asset acquisition(s), disposition(s), merger(s) or
other strategic transaction(s); (vi) upon consultation with and
approval of the Board or of the applicable committee of the Board,
as the case may be, communicate and/or negotiate with outside
constituents, including, but not limited to, the Official
Bondholders Committee and lenders to the Company’s subsidiaries;
(vii) review and analyze any revised business plan(s), including
financial and operating budgets, provided by Company management and
the Company’s advisors; (viii) assess employee compensation
matters, including the development and implementation of any key
employee incentive or retention program(s); and (ix) review the
Company’s business reporting systems and recommend changes, if
appropriate, to improve effectiveness.
During the
term of the Consulting Agreement, Mr. Stein will receive a monthly
consulting fee of $100,000, which shall be prorated for partial
months; provided, however, that Mr. Stein shall be entitled to
receive a minimum of $600,000 in aggregate consulting fees pursuant
to the Consulting Agreement. In addition, Mr. Stein will be
entitled to a success bonus of $1,250,000 upon the completion of
any “Success Event,” which is the confirmation of a Chapter 11 plan
of reorganization pursuant to section 1129 of the Bankruptcy Code,
or a sale pursuant to Section 363 of the Bankruptcy Code, that
involves substantially all of the assets of the Company and its
subsidiaries and restructures or otherwise resolves all or
substantially all of the indebtedness of the Company and its
subsidiaries or otherwise restructures or changes the ownership of
the Company. Mr. Stein is also entitled to reimbursement for
reasonable business expenses necessary or appropriate to carry out
his duties as Chief Restructuring Officer. As disclosed above, Mr.
Stein will not be entitled to any fees for serving as a director of
the Company while he is serving as Chief Restructuring Officer. In
addition, Mr. Stein is not eligible to participate in any health,
welfare, retirement, or other benefit plans or policies offered by
the Company to its employees.
The
foregoing description of the Consulting Agreement is qualified in
its entirety by the terms of such agreement, which is filed as an
exhibit to this Current Report on Form 8-K and incorporated herein
by reference.
Bankruptcy Court
Approval
While Mr. Horton and Mr. Stein have been duly appointed as
directors of the Company as of June 20, 2022, the compensation and
other terms of the engagements of Messrs. Horton and Stein are
subject to approval by the Bankruptcy Court.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
| |
GWG
HOLDINGS, INC. |
| |
|
|
| Date:
June 24, 2022 |
By: |
/s/
Timothy L. Evans |
| |
Name: |
Timothy
L. Evans |
| |
Title: |
Chief
Financial Officer |
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