FOLLOW US

Sysorex Government Services Inc. (SGS), a government IT contractor, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York. The company, which provides IT services to federal, state, and local governments, has cited mounting financial difficulties, including over $30 million in debt and uncertainty surrounding potential cuts from the Department of Government Efficiency (DOGE).

In a declaration filed on Monday, SGS President A. Zaman Khan outlined the challenges the company has faced, including a possible hold on a key contract with the U.S. Department of Agriculture, which may be impacted by DOGE's budget reduction initiatives. The company has been actively seeking a buyer for the past 37 months but hopes that Chapter 11 protection will help facilitate the sale process.

"The debtor experienced funding difficulties that disrupted its ability to fulfill existing orders and pursue new opportunities," said Khan. "We are hopeful that this process will help us stabilize and address these challenges."

SGS is also dealing with a $782,000 judgment from former vendor Canon USA, which is seeking to enforce the judgment. Despite these financial strains, the company continues to operate with a small team of nine employees.

Over the past three years, two customers have accounted for approximately 85% of SGS' gross revenue. The company lists assets between $1 million and $10 million in its bankruptcy petition.

The case, assigned to U.S. Bankruptcy Judge John P. Mastando III, is proceeding under case number 1:25-bk-10920.