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LOAN RECEIVABLES AND ENGLOBAL ACQUISITION | 3 Months Ended
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Mar. 31, 2025
Receivables [Abstract] |
LOAN RECEIVABLES AND ENGLOBAL ACQUISITION | 3. LOAN RECEIVABLES AND ENGLOBAL ACQUISITION On March 6, 2025, we entered into a senior secured, super-priority debtors-in-possession credit agreement (the “DIP Credit Agreement”), as lender, with ENGlobal Corporation (“ENGlobal”), as debtor-in-possession, and certain of its subsidiaries, as guarantors. The DIP Credit Agreement was provided in connection with ENGlobal’s filing for chapter 11 bankruptcy relief (the “ENGlobal Chapter 11”) pending before the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”), which commenced on March 5, 2025. Pursuant to the DIP Credit Agreement, we may loan up to a maximum of $2.5 million to ENGlobal, which includes the roll-up of a prepetition secured bridge loan (collectively, the “DIP Loan”). The DIP Loan accrues interest at a rate of 12.0% per annum (plus a 4.0% default rate per annum, if applicable) and is secured by all assets of ENGlobal. At March 31, 2025, we had $1.2 million due from ENGlobal related to advances made during the first quarter 2025 pursuant to the DIP Loan, which is reflected within prepaid expenses and other assets on our Balance Sheet. Further, in April 2025, we made additional advances of $1.3 million, and accordingly, $2.5 million was due from ENGlobal as of the filing date of this Report. The DIP Loan will mature upon the earlier of, among other events, the sale of ENGlobal (or all or substantially all of its assets), the consummation of a plan of reorganization or a plan of liquidation of ENGlobal in connection with the ENGlobal Chapter 11, or September 5, 2025, subject to our right to accelerate if there is an earlier event of default. In addition, on April 10, 2025, we entered into a loan sale and assignment agreement with Alliance 2000, Ltd. (“Alliance”), a creditor of ENGlobal, pursuant to which we assumed Alliance’s senior secured loan of $2.4 million due from ENGlobal in exchange for a cash payment of $1.5 million to Alliance (the “Assumed Loan”). We entered into the DIP Loan and Assumed Loan with the right to submit as a “credit bid” any amounts owed under the agreements in any offer by us to purchase all or a portion of ENGlobal’s assets. On April 18, 2025, we were named as the successful bidder in the Bankruptcy Court-supervised auction process for certain assets of ENGlobal (the “ENGlobal Business”). Accordingly, pursuant to an asset purchase agreement entered into on April 15, 2025 (the “Asset Purchase Agreement”), we expect to acquire the ENGlobal Business (the “Acquisition”), the consideration for which will be the assumption of certain liabilities and a “credit bid” of $2.5 million, representing the full amount of the DIP Loan. On April 25, 2025, the Bankruptcy Court approved the Acquisition. The Asset Purchase Agreement provides for certain termination rights for both the Company and ENGlobal, including by mutual written consent, if ENGlobal’s bankruptcy case is converted to chapter 7, if the transaction is not consummated by June 30, 2025, if either party fails to materially comply with any of its covenants or materially breaches its representations and warranties and such failure or breach cannot be cured or is not cured within 15 business days of receipt of written notice of such failure or breach from the non-breaching party, or if any court or governmental authority shall have issued a non-appealable order which permanently restrains, enjoins or prohibits the transaction. We expect to complete the Acquisition in the second quarter 2025, subject to the receipt or waiver of certain customer consents and satisfaction or waiver of customary conditions set forth in the Asset Purchase Agreement. We can give no assurances of the outcome of the Acquisition and whether we will be successful in completing the Acquisition. The DIP Loan and Assumed Loan, or portions thereof, will potentially represent the purchase price of the ENGlobal Business if the Acquisition is consummated. However, to the extent such amounts are not considered purchase price or are not otherwise deemed recoverable from ENGlobal, such amounts would result in a future charge associated with the write-off of any unrecoverable amounts.

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- Definition The entire disclosure for claims held for amounts due to entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/310-10/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 835 -SubTopic 30 -Name Accounting Standards Codification -Section 45 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482925/835-30-45-2 + Details
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