Trump announces 100% chip tariff as Apple ups U.S. investment
ENGlobal Corp (NASDAQ:ENGC), an engineering services firm with a market capitalization of just $680,000, has voluntarily filed for Chapter 11 bankruptcy protection on Monday, according to a recent SEC filing. The company’s financial struggles are evident in its negative EBITDA of $4.23 million and steep revenue decline of 38.7% over the last twelve months. InvestingPro analysis shows concerning fundamentals with a weak Financial Health Score. The Houston-based company, along with its subsidiaries ENGlobal U.S., Inc., ENGlobal Government Services, Inc., and ENGlobal Technologies, LLC, initiated the process in the Southern District of Texas, Houston Division.
The firm, which now operates as a debtor-in-possession, has requested the court to jointly administer the Chapter 11 cases for procedural purposes. ENGlobal plans to continue its normal business operations under court jurisdiction while pursuing a court-administered restructuring to maintain value and support its strategic alternatives process.
ENGlobal is in discussions with a potential stalking horse bidder to provide debtor-in-possession financing and aims to present an agreement to the court as early as next week to proceed with a sale transaction. The company’s legal counsel, Okin Adams Bartlett Curry LLP, and restructuring advisors, Getzler Henrich & Associates, are assisting in the process.
The bankruptcy filing has triggered defaults under certain debt agreements, including an Amended and Restated Credit Agreement with Alliance 2000, Ltd. and a Loan and Security Agreement with an unaffiliated party. These obligations are stayed due to the bankruptcy filing, and creditor rights are subject to the bankruptcy code.
ENGlobal warned that trading its securities is highly speculative and risky during the Chapter 11 process, as trading prices may not reflect the actual recovery for securities holders. The stock has already experienced a dramatic 92.68% decline over the past year, currently trading at $0.13, down from its 52-week high of $2.30. For real-time monitoring of ENGlobal’s financial metrics and expert analysis during this critical period, investors can access comprehensive data through InvestingPro, which offers detailed bankruptcy risk indicators and valuation metrics.
This news comes as the latest development for ENGlobal, which has been facing financial challenges. The company cautions that forward-looking statements in the SEC filing involve risks and uncertainties, and actual results could differ materially. The information is based on a press release statement.
In other recent news, ENGlobal Corporation has secured a $500,000 loan through a Loan and Security Agreement with an unnamed lender. This credit facility is backed by a first priority security interest in the company’s assets, and it carries a 12% annual interest rate. The loan, which matures on March 5, 2025, includes restrictive covenants that limit ENGlobal’s financial and operational activities, such as incurring additional debt and merging with other companies. This move provides ENGlobal with additional capital, potentially supporting its ongoing projects and operational needs, as disclosed in a recent SEC filing.
Additionally, ENGlobal’s shareholders have approved the election of all five nominees to the Board of Directors and ratified the appointment of M&K CPAS, PLLC as the independent auditors for the fiscal year 2024. The vote count showed strong shareholder support for the current leadership and their choice of auditors. These developments were detailed in a filing with the Securities and Exchange Commission, highlighting ENGlobal’s commitment to transparency and regulatory compliance. The company’s focus on sound corporate governance aims to maintain investor confidence and operational efficiency.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.