Recent filings in the GWG Holdings Chapter 11 bankruptcy case show requests for Southern District Bankruptcy Judge Marvin Isgur to recuse himself and for former Jackson Walker attorney Elizabeth Freeman to be removed as the wind down trustee.
GWG, a Dallas-based financial services firm that sells bonds backed by life insurance policies, filed its Chapter 11 bankruptcy petition in April 2022.
Part of the recusal request filed Aug. 4 asks that Judge Isgur remove himself from any decision that may need to be made concerning Freeman.
The bondholders acknowledged Judge Isgur has presided over the case since its inception but note that there is no clear public record that he has filed a Rule 6 complaint against Freeman and that the judge has allowed her to continue in a fiduciary role.
“Movants do not argue that mere friendship is a basis for recusal. Rather, it provides context for Judge Isgur’s decision to allow Ms. Freeman to remain in place as a fiduciary appointed by the Court despite his own recognition of the same misconduct (by Mr. Freeman’s firm) that required referral under Local Rule 6. The 30-year friendship itself does not suggest impartiality,” the motion reads. “However, in light of Judge Isgur’s failure to remove Ms. Freeman as Wind Down Trustee despite recognizing that the same ethical violations by her firm required disciplinary referral, it would lead a reasonable person to call into question whether Judge Isgur’s relationship with Jones led him to protect Jones and his girlfriend.”
It was revealed in October 2023 that Freeman was the long-term girlfriend of David Jones, who was a federal bankruptcy judge at the time. Jones then resigned from the bench, and Freeman has since left Dallas-based Jackson Walker and started her own firm.
Separately, former Beneficient CEO Brad Heppner filed a motion July 31 asking to remove his Quinn Emanuel Urquhart & Sullivan lawyers from the case. He said he has retained Frank J. Wright of the Law Offices of Frank J. Wright. Heppner left Beneficient in June.
Dallas-based Beneficient is a financial services firm and a subsidiary of GWG Holdings.
In April, Judge Isgur found the lawyers for the trustee had failed to meet their due process obligations to provide bondholders with notice of how a proposed settlement would impact them.
The case is In re: GWG Holdings Inc., et al., 22-90032.