ENGlobal: Ransomware Attack Triggers Engineering Firm's 100-Day Restructuring

ENGlobal Corporation's chapter 11 filing in March 2025 followed a sequence of operational and financial setbacks at a company with four decades of history. Founded in 1985 as a Houston-based engineering services provider, ENGlobal served Fortune 500 energy companies and federal agencies including the Department of Defense and Department of Energy. A ransomware attack in November 2024 that disrupted operations for six weeks—combined with declining revenue, Nasdaq delisting, and mounting debt—led the small-cap contractor into bankruptcy court. The case featured integrated DIP-to-acquisition financing: Gulf Island Fabrication, Inc. provided $2.5 million in debtor-in-possession financing, then credit bid its position to acquire substantially all of ENGlobal's assets for approximately $5.5 million. The restructuring—from petition to confirmation—concluded in 100 days, with a liquidating trust now administering the wind-down.

Company Background and Business Segments

Company History.

ENGlobal Corporation traces its origins to 1985, when William A. Coskey, P.E. co-founded the company in Houston as Industrial Data Systems Corporation. The firm changed its name to ENGlobal Corporation in June 2002, following a December 2001 merger with Petrocon Engineering, Inc. that expanded its engineering capabilities. For more than a decade, ENGlobal ranked among the Engineering News Record's Top 500 engineering design firms, establishing itself as a specialty provider of project solutions for the energy industry.

At the time of its bankruptcy filing, as described in the First Day Declaration, ENGlobal maintained operations in Houston, Texas and Tulsa, Oklahoma, employing approximately 100 workers across its various business units. The company operated through three wholly-owned subsidiaries—ENGlobal U.S., Inc., ENGlobal Government Services, Inc., and ENGlobal Technologies LLC—all of which joined the parent company as co-debtors in the chapter 11 proceedings.

Business Segments.

ENGlobal's operations were organized into three core business segments, each serving distinct customer bases within the energy and government sectors:

The government services segment featured during the sale process. As a contractor supporting defense and energy infrastructure, ENGlobal held active contracts with the U.S. military and maintained relationships with government agencies.

Leadership and Related-Party Dynamics.

The relationship between ENGlobal's leadership and its capital structure shaped the case. William A. Coskey, P.E., the company's co-founder, served as Chairman of the Board since June 2005 and as CEO from August 2012 until March 2021, when CFO Mark Hess assumed the chief executive role. When Hess resigned in February 2023, Coskey returned to active leadership as Executive Chairman.

Beyond his management role, Coskey maintained a substantial financial interest in ENGlobal through Alliance 2000, Ltd., his family limited partnership. As disclosed in Schedule 13D filings, Alliance 2000 held more than 22% of ENGlobal's outstanding common stock and became a prepetition secured lender to the company. Gulf Island Fabrication later assumed Alliance 2000's approximately $2.4 million loan position for $1.5 million in cash—a 37.5% discount.

Path to Bankruptcy

Financial Deterioration (2023-2024).

ENGlobal's bankruptcy followed multiple operating and financial setbacks. The company's financial performance deteriorated throughout 2023 and 2024, with revenue declines despite cost-cutting efforts.

Third-quarter 2024 revenues fell to $5.7 million, a 40% decline from $9.5 million in the same quarter of 2023. For the nine months ending September 2024, revenues totaled $18.4 million compared to $32.4 million in the prior-year period. While net losses improved—the nine-month loss narrowed by $8.3 million to $3.1 million—the company remained unprofitable.

Management cut selling, general, and administrative expenses from $2.5 million to $1.8 million quarter-over-quarter. Total backlog as of March 2024 stood at approximately $10.8 million. CEO William Coskey acknowledged in November 2024 that the company had "work to do in the coming weeks and months" to strengthen its financial position and return to profitability.

Transition to Related-Party Financing.

As traditional bank financing became increasingly difficult to secure, ENGlobal turned to its founder's family for capital. In June 2023, the company repaid its credit facility with Pacific Western Business Finance and entered into a new credit agreement with Alliance 2000, Ltd. The initial term loan provided $1.0 million, with an additional $250,000 available under certain conditions, at an interest rate of 8.5% annually.

By April 2024, the Alliance 2000 credit agreement was amended and restated, and the company's 8-K filing noted that the chapter 11 filing triggered an event of default accelerating all obligations under the amended facility. A separate loan entered in February 2025 with an unaffiliated party also defaulted upon filing. At the time of bankruptcy, Alliance 2000's secured claim totaled approximately $2.4 million, later purchased by Gulf Island Fabrication for $1.5 million in cash.

The Ransomware Attack.

On November 25, 2024, threat actors launched a ransomware attack against ENGlobal's systems. The attack encrypted certain data files and limited the company's ability to access business applications supporting operations and corporate functions, including financial and operating reporting systems.

ENGlobal's operations remained disrupted for approximately six weeks—significantly longer than the industry average of roughly 17 working days for ransomware containment and remediation. During this period, management disclosed that operations were "limited" in an SEC filing just eight days after the attack began.

The threat actor accessed a portion of ENGlobal's IT system containing sensitive personal information. The company planned notifications to affected individuals and regulatory agencies as required by breach notification laws. No ransomware group publicly claimed responsibility for the attack.

Operations were not fully restored until January 28, 2025—just five weeks before the bankruptcy filing.

Nasdaq Delisting.

ENGlobal received a non-compliance notice on December 5, 2024, when Nasdaq notified the company of failure to meet Listing Rule 5550(b), which requires minimum shareholders' equity. The ransomware attack was still disrupting operations when ENGlobal's common stock was suspended from Nasdaq trading the following day, with shares moving to OTC Markets under the new symbol "ENGC."

The company had a 15-day window to request a hearing before the Nasdaq Listing and Hearing Review Council but did not pursue an appeal. On May 23, 2025—during the bankruptcy proceedings—Nasdaq formally announced the delisting of ENGlobal's common stock along with 17 other companies.

The timeline included a ransomware attack in late November, Nasdaq delisting in early December, and a bankruptcy filing in early March.

The 363 Sale Process

DIP Financing Structure.

ENGlobal's chapter 11 strategy centered on a court-supervised sale under Section 363 of the Bankruptcy Code, with Gulf Island Fabrication, Inc. positioned as both financier and stalking horse bidder.

Gulf Island agreed to provide a $2.5 million DIP credit facility, which the bankruptcy court approved in an Interim DIP Order on March 6, 2025—just one day after the petition. The Final DIP Order followed on March 24, 2025. The facility included $2.1 million in new money loans and a $400,000 roll-up of prepetition bridge financing that Gulf Island had extended before the filing.

The DIP agreement included milestones designed to set a sale timeline:

Texas taxing authorities filed a joint objection to the DIP motion on March 19, 2025, but the court approved the financing over their objections.

Bidding Procedures and Stalking Horse.

The Bidding Procedures Order entered on March 24, 2025, established a timeline to market-test Gulf Island's stalking horse bid. Key dates included:

The procedures allowed prospective bidders to submit offers for ENGlobal's assets in individual lots by business unit or geography, as a collective whole, or in any combination.

Gulf Island's position as both DIP lender and stalking horse bidder allowed it to credit bid its superpriority DIP claims against the purchase price, reducing the need for new cash at closing. No competing qualified bids emerged by the April 17 deadline, eliminating the need for an auction. The sale hearing proceeded as scheduled on April 25, and the court entered the Sale Order the same day.

Sale to Gulf Island Fabrication.

The sale transaction used an integrated DIP-to-acquisition structure. Gulf Island's total capital commitment approximated $5.5 million, comprising three components:

Gulf Island entered into a loan sale and assignment agreement effective April 10, 2025, purchasing Alliance 2000's approximately $2.4 million senior secured loan for $1.5 million in cash—a discount of roughly 37.5%.

The transaction closed in two tranches. The automation business acquisition became effective on May 12, 2025, followed by the engineering and government services businesses on June 16, 2025.

An Amended Sale Order entered on May 27, 2025 addressed certain post-closing adjustments, though the core transaction terms remained intact.

Liquidating Plan and Confirmation

Plan Structure and Approval.

With the sale completed, the debtors turned to plan confirmation. ENGlobal's chapter 11 plan took the form of a joint liquidating plan rather than a traditional reorganization, as substantially all operating assets had been sold to Gulf Island and the remaining estate property would be distributed to creditors through a trust structure.

The Plan and Disclosure Statement were filed on May 28, 2025, with the court conditionally approving the disclosure statement just two days later on May 30. A plan supplement filed on June 3 provided additional details regarding the liquidating trust agreement and trustee designation.

The confirmation process proceeded without significant opposition. All voting classes either accepted the plan, did not vote, or were deemed to accept under the Bankruptcy Code's treatment provisions. No formal objections to confirmation were filed by the designated deadline. The Texas taxing authorities, who had previously objected to the DIP motion, also filed a plan objection on April 21, 2025, but this did not prevent approval. The court entered the Confirmation Order on June 13, 2025—100 days after the petition date.

Liquidating Trust Administration.

The confirmed plan established a liquidating trust to administer remaining estate assets and make distributions to creditors. John D. Baumgartner, who had served as the debtors' Chief Restructuring Officer during the chapter 11 case, was appointed as Liquidating Trustee.

All remaining estate property vested in the liquidating trust on the plan's effective date. The trust agreement granted Baumgartner authority to operate, manage, and wind up the debtors' affairs without ongoing court supervision. The DIP lender agreed to provide funding for allowed administrative expense claims, ensuring that professional fees and other priority obligations would be satisfied.

The plan provided for full release of all claims against the debtors, estates, estate property, liquidating trust, and trust assets. All mortgages, deeds of trust, liens, and security interests were released on the effective date, and all notes, instruments, and certificates evidencing claims or interests were cancelled.

Post-Sale Integration: The Gulf Island Perspective

Gulf Island Fabrication, a Louisiana-based provider of fabrication and services to the energy, petrochemical, and industrial sectors, said the acquisition was consistent with its strategy of diversifying into new markets through the automation, engineering, and government services capabilities it acquired.

Gulf Island's first quarter 2025 results reported $40.3 million in revenue, $3.8 million in net income, and $67.5 million in cash and short-term investments. Management said it expected the acquired ENGlobal business to generate operating losses of $1.0 to $2.0 million during the initial six-to-twelve month integration period.

Second quarter 2025 results disclosed that Gulf Island's revenue declined to $37.5 million with a net loss of $0.6 million. The acquired business incurred $0.5 million in operating losses during Q2 2025, and management projected additional losses of $1.5 to $2.0 million through the remainder of the year.

Gulf Island said the business is expected to contribute to profitability beginning in 2026. CEO Richard Heo stated the company was "excited to have closed the Englobal Acquisition."

In September 2025, the ENGlobal government services business was awarded a task order exceeding $7.0 million from the U.S. Defense Logistics Agency. The fixed-price contract covers upgrading and installing an automated fuel handling system at Fleet Logistics Center in Yokosuka, Japan, with work beginning in September 2025 and completion anticipated in the first quarter of 2028. The task order is part of an indefinite-delivery, indefinite-quantity contract structure extending through September 2029.

CEO Heo characterized the award as highlighting "Englobal's proven history of delivering critical services to the U.S. government."

Contested Matters and Post-Confirmation Disputes

Texas Taxing Authorities.

The Texas taxing authorities filed a joint objection to the DIP motion on March 19, 2025 and a subsequent objection to plan confirmation on April 21, 2025.

Neither objection succeeded in blocking the transaction. The DIP financing was approved on its original terms, and the plan was confirmed without modification of the tax treatment provisions. The resolutions—whether through negotiation, withdrawal of objections, or court ruling—are not detailed in the available docket entries.

Cure Amount and Administrative Expense Disputes.

Contract assumption under Section 365 of the Bankruptcy Code requires payment of cure amounts to remedy prepetition defaults. FMC Technologies, Inc. disputed the cure amount proposed for its contract, filing an objection on April 18, 2025. The dispute escalated to an administrative expense application filed on June 9, 2025, to which the liquidating trustee objected on June 30.

The parties reached a stipulated resolution that the court approved on September 10, 2025, ending the litigation without a contested hearing on the merits.

Other administrative expense claims followed a similar pattern:

American Bank Motion to Compel.

A post-confirmation dispute involves American Bank, N.A., which filed a Motion to Compel on October 29, 2025 concerning the sale of certain equipment and related UCC financing statements. The bank contends that the sale order's treatment of its security interests or the subsequent disposition of collateral failed to comply with applicable requirements.

Gulf Island Fabrication filed an objection on November 23, 2025, and the matter has proceeded through mediation and additional hearings extending into December 2025. A sur-reply order entered December 16 indicates ongoing briefing. The dispute concerns the treatment of security interests and the disposition of collateral following the sale.

Professional Retentions and Fees

ENGlobal's professional team included:

No official committee of unsecured creditors was appointed in the case.

Final fee applications were filed and approved in September 2025:

• Okin Adams Bartlett Curry LLP: Application filed September 2, 2025; Order approved September 2, 2025
• John D. Baumgartner (CRO/Trustee): Application filed September 2025; Order approved September 9, 2025

The case moved from petition through confirmation in 100 days, with continued administration through the liquidating trust.

Key Timeline

Frequently Asked Questions

What caused ENGlobal's bankruptcy?

ENGlobal's chapter 11 filing resulted from multiple factors: declining revenue (down 40% year-over-year in Q3 2024), a ransomware attack in November 2024 that disrupted operations for six weeks, Nasdaq delisting in December 2024 for failure to maintain minimum shareholders' equity, and mounting debt obligations.

Who acquired ENGlobal's business?

Gulf Island Fabrication, Inc. acquired substantially all of ENGlobal's automation, engineering, and government services businesses for approximately $5.5 million in total consideration. Gulf Island served as both the DIP lender ($2.5 million facility) and stalking horse bidder, credit bidding its secured claims to acquire the assets.

What was the ransomware attack that affected ENGlobal?

On November 25, 2024, threat actors compromised ENGlobal's IT systems, encrypting data files and accessing sensitive personal information. The attack limited access to business applications supporting operations, financial reporting, and corporate functions for approximately six weeks—significantly longer than the industry average recovery time. No ransomware group claimed responsibility for the attack.

How much DIP financing did ENGlobal receive?

Gulf Island Fabrication provided $2.5 million in debtor-in-possession financing at 12% annual interest, comprising $2.1 million in new money and a $400,000 roll-up of prepetition bridge financing. The DIP facility included milestones requiring sale motion filing within 14 days and sale closing within approximately 80 days of the petition.

How long did the bankruptcy take?

The case moved from petition to sale order in 51 days and from petition to plan confirmation in 100 days. The first sale tranche (automation business) closed on May 12, 2025, with the second tranche (engineering and government services) closing on June 16, 2025. A liquidating trust now administers remaining estate matters.

What happened to ENGlobal's stock?

ENGlobal received a Nasdaq non-compliance notice on December 5, 2024, and trading was suspended the following day, with shares moving to OTC Markets under the symbol "ENGC." Nasdaq formally announced the delisting on May 23, 2025, during the bankruptcy proceedings. Equity holders received no recovery under the liquidating plan.

Who was Alliance 2000, Ltd.?

Alliance 2000 is the family limited partnership of ENGlobal's Executive Chairman William A. Coskey, P.E. The entity held more than 22% of ENGlobal's outstanding common stock and was a prepetition secured lender with approximately $2.4 million in claims. Gulf Island purchased Alliance 2000's loan position for $1.5 million as part of the acquisition structure.

Is the ENGlobal business still operating?

Yes. Gulf Island completed the acquisition and continues operating the automation, engineering, and government services businesses. In September 2025, the government services unit was awarded a task order exceeding $7.0 million from the U.S. Defense Logistics Agency for work at a military facility in Japan.

What is a liquidating trust?

A liquidating trust is a post-confirmation vehicle that holds remaining estate assets after a sale and administers distributions to creditors according to the confirmed plan. John D. Baumgartner, who served as Chief Restructuring Officer during the chapter 11 case, was appointed as Liquidating Trustee with authority to wind up affairs without ongoing court supervision.

What were ENGlobal's key customers before bankruptcy?

ENGlobal served Fortune 500 energy companies through its engineering and automation segments, and U.S. federal agencies—including the Department of Defense and Department of Energy—through its government services segment. These customer relationships were preserved through the sale and continue under Gulf Island's ownership.

Who is the claims agent for ENGlobal?

Kroll Restructuring Administration LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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