Construction Startup Katerra Files for Chapter 11 Bankruptcy Protection

Masayoshi Son, CEO of Softbank (Getty, Katerra, iStock)

Even after losing hundreds of millions of dollars in debt late last year and receiving a $ 200 million ransom, Katerra has resorted to bankruptcy in its struggle to survive.

The business filed for protection under Chapter 11 on Sunday, listing liabilities between $ 1 billion and $ 10 billion and assets of just $ 500 million to $ 1 billion. Katerra secured $ 35 million in financing from a unit of SoftBank Group, its largest investor, to continue operating during the bankruptcy reorganization. The Wall street journal first reported the news.

The information had reported last week that the company abruptly told employees it would be closing, potentially without paying severance pay or unused time off, but the company did not announce its closure.

In December, SoftBank reportedly provided more than $ 200 million to Katerra, in addition to the $ 2 billion it had already invested. The move kept the construction tech startup out of bankruptcy and also gave SoftBank a majority stake in the company. The deal also canceled $ 435 million in debt Katerra had with SoftBank-backed financial services firm Greensill Capital, the Wall Street Journal reported at the time.

In a press release, Katerra blamed the “rapid deterioration of the company’s financial position” on the pandemic, its inability to secure more capital and business and the “unexpected insolvency proceedings” of its former lender. The company does not identify the lender, although Greensill reportedly filed for bad debt protection in March. But Katerra’s problems started long before the pandemic, such as The royal agreement reported in a Research Piece 2019.

Bankruptcy filings indicate that Katerra plans to sell two of its business lines, Renovations and Lord Aeck Sargent architecture, although potential buyers are not listed. More than 30 Katerra affiliates, including those affiliates, are listed in the court documents. Last week, the directors of two other subsidiaries, Michael Green Architecture and Equilibrium,
indicated that they are working for financial independent Of the company.

Since the departure of Katerra’s last CEO, Paal Kibsgaard, the company’s leadership structure has been unclear. The leadership page on the Katerra website displays an error page. Marc Liebman of restructuring consultancy Alvarex & Marsal is listed as the company’s new transformation director in bankruptcy filings. According to Liebman, the company will continue its international business. Last year, Katerra won a contract for buy thousands of homes in Saudi Arabia. In the US, Katerra will continue with certain active projects and move away from others.

“While a number of negative factors have led to Katerra’s current challenges, we are implementing initiatives on multiple fronts to maximize value and provide the best way forward for Katerra and its many stakeholders,” Liebman said in a statement.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top