I am an engineering PhD candidate at a US university. I left the university a couple of years ago after 5yrs of PhD work to work as an independent scientist, while also working with my advisor on the completion of my PhD on the side (while not being enrolled in the university all this while). I received a notice recently from the department asking me to defend my thesis ASAP or risk being terminated from the PhD program.
What exactly does termination mean, and what does it entail?
On a side note, what are the implications of such a termination on my professional career in the industry? For ex. does it show up in a background check? I have a Bachelor's (from another university) and Master's degree (from the same university).
This is normal practice these days at universities. In the old days, doctoral students could drift away from their program mid-stream and people wouldn't really care. They might return after 20 years to submit their dissertation, but otherwise there was no attempt to track these zombie students down.
Unfortunately, many places are now using average time-to-degree (TTD) as metrics to a graduate program's quality (purportedly a lower TTD is better). Zombie students are problematic as you can have someone who is 15 years into a program without graduating, dragging the average up. Note that there is a difference between a nominal TTD and actual TTDs -- for example, in my old university the nominal TTD was 5 years but very few people actually graduated in that time, the average was closer to 6.5 years.
In my experience, provosts are asking departments to track the zombies down and determine whether they should be terminated or not. Being terminated isn't a bad thing, it means that you will be left with your last degree (e.g., M.Phil) and you shouldn't really call yourself ABD as you won't be permitted to submit. I've been through a few of these cullings and as faculty I think they are a good thing as zombie students on the books really help no one.
If you have any hope of submitting, I would ask that you be given some time (1 year would be reasonable) to submit. Otherwise, I would take your MA/M.Phil and be happy with it. I don't think there are any negatives for a career in industry. Again, you technically shouldn't call yourself ABD (rather you "withdrew from program after meeting all qualifications for the doctorate but the dissertation") but I really don't think anyone is going to check. Think of it as a general discharge, under honorable conditions.