Katerra Construction Startup Files for Chapter 11 Bankruptcy Protection

Softbank CEO Masayoshi Son (Getty, Katerra, iStock)

Even after giving up hundreds of millions of dollars in debt at the end of last year and receiving a $ 200 million bailout, Katerra has resorted to bankruptcy in her struggle to survive.

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

Information reported last week that the company abruptly told employees it would be shutting down, potentially without paying severance pay or unused leave, but the company did not announce its closure.

In December, SoftBank reportedly provided over $ 200 million to Katerra, in addition to the $ 2 billion already invested. The move saved the construction tech startup from bankruptcy and also gave SoftBank a controlling stake in the company. The deal also forgave Katerra’s $ 435 million debt to SoftBank-backed financial services firm Greensill Capital, the Wall Street Journal reported at the time.

In a press release, Katerra blamed the pandemic for the “rapid deterioration in the financial condition of the company”, its inability to raise more capital and business, and the “unexpected insolvency proceedings” of her former lender. . The company does not identify the lender, although Greensill reportedly filed for insolvency protection in March. But Katerra’s troubles began long before the pandemic, because The real deal reported in a 2019 investigative article.

Bankruptcy filings indicate that Katerra plans to sell two of its lines of business, renovations and architecture Lord Aeck Sargent, although potential buyers are not listed. More than 30 Katerra affiliates, including these affiliates, are listed in court documents. Last week, the managers of two other subsidiaries, Michael Green Architecture and Equilibrium,
indicated that they were working towards financial independence from the company.

Since the departure of Katerra’s last CEO, Paal Kibsgaard, the management structure of the company is unclear. The leadership page on Katerra’s website displays an error page. Marc Liebman of turnaround consultancy Alvarex & Marsal is listed as the new director of business transformation for bankruptcy filings. According to Liebman, the company will continue its international activities. Last year, Katerra won a contract to buy thousands of homes in Saudi Arabia. In the United States, Katerra will pursue some 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 her many stakeholders,” said Liebman in a press release.

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