Citing a range of factors that have weakened its finances, Katerra filed for Chapter 11 bankruptcy protection in federal court in Houston on June 7.
Katerra has told employees it plans to shut down, people familiar with the matter said, marking the collapse of the SoftBank-backed company that had raised more than $2 billion to slash the cost of building apartments. Katerra is expected to let go of thousands of employees and is likely to walk away from dozens of construction projects it had agreed to build, one of the people said. The publication, The Information, previously detailed Katerra’s six-year rise and near collapse last year, which included an investigation into the company’s accounting practices by its board and the Securities and Exchange Commission. “Following a thorough review of strategic business alternatives, Katerra has determined that it must wind down the majority of its U.S. business operations, effective immediately,” Katerra told employees in an email Tuesday afternoon. “Unfortunately, most of our U.S. employees will no longer be working for Katerra in the near future.” The company said in the email it was exploring “suspended operations, asset sales and divestitures, in- or out-of-court restructuring alternatives and other possible actions.” Katerra raised money largely from SoftBank’s Vision Fund, the largest tech fund in the world. The startup, founded in 2015 by electronics industry veteran Michael Marks, is the second company backed by SoftBank’s Vision Fund to shut down this year, after financial technology firm Greensill Capital. SoftBank CEO Masayoshi Son last week named Katerra alongside WeWork and Greensill as one of the investment firm’s biggest failures. The company informed employees Tuesday about the shutdown. An executive told employees on a video call that the firm didn’t have enough money to pay severance packages or unused paid time off, a person who attended the meeting said. The executive said the effects of Covid-19, as well as rising costs of labor and construction materials, contributed to its latest cash crunch. In the email to employees, the company also said it was unable to secure debt for construction projects after one of its previous lenders, Greensill, itself went bankrupt. “The impact has been severe – with cash reserves reduced to the point where the current business model can no longer be sustained,” the company said. Last year, the company began exploring a Chapter 11 bankruptcy to address outstanding debts, the company previously told investors. Katerra had planned to raise additional equity from investors by the end of this month after raising $200 million in fresh capital from SoftBank last December in a restructuring that gave the Japanese company a majority stake. The board of directors voted to fire Marks last spring. The company’s most recent chief, Paal Kibsgaard, former chairman and CEO of Schlumberger, the world's largest oilfield services company, stepped down last month. The company is currently being led by representatives of turnaround consulting firm Alvarez & Marsal. Katerra has more than 2,400 employees, according to LinkedIn. It previously had as many as 8,500 before several rounds of layoffs. Reported by The Information (June 1, 2021)
0 Comments
Leave a Reply. |
Author
Archives
January 2022
Categories |