Failed construction firm Katerra last week launched a series of lawsuits against five former shareholders, alleging breach of contract. The lawsuits were filed April 28 through May 2 in the United States Bankruptcy Court for the Southern District of Texas on behalf of Katerra, its creditors and bankruptcy plan administrators. They demanded more than $2.3 million from former executives and employees.
The biggest lawsuit is against former Katerra president Trevor Schick, who is accused of breaching a $1.1 million contract. As part of a 2017 retention bonus, Schick entered into an agreement in which his former employer lent him money to buy company stock, the lawsuit said. The loan is secured by the purchased stock itself, and this financing arrangement is often referred to as an employee stock purchase loan. According to the lawsuit, the agreement stipulates that if Schick sells any shares, he will have to repay the loan. Schick sold 250,000 shares he bought with a loan in March 2018, triggering the default, the lawsuit said. Katla, It closed in 2021, The original loan amount, plus interest and fees, is now being sought.
Mismanagement is at the heart of much of Katerra’s financial woes, as The company will be investigated by the China Securities Regulatory Commission in 2021 After misrepresenting revenue and operating margins in company filings. A string of misfortunes ensue, including layoffs, delayed deliveries, factory closed and leadership reshuffling. According to one of the lawsuits, the company “suffered financial losses of approximately $2.78 billion” between 2018 and 2020.
In a separate lawsuit filed last week, former Katerra manufacturing executive Matthew Ryan is also accused of failing to repay a loan he used to buy stock in the company in 2017. default on the loan due to the dissolution of the company in 2021, and As of January 2023, Ryan is allegedly owed $810,000, which includes principal and accrued interest.
Other lawsuits target former development executive Nicholas Brathwaite, former software vice president Abhijit Oak, and former human resources executive Samantha Rist. Rist, Oak and Brathwaite are also accused of defaulting on loans used to purchase stock totaling $104,00, $162,000 and $168,000, respectively. Katerra is seeking liquidated damages and claims the five former executives “unjustly enriched” by accepting and retaining benefits awarded by Katerra.
These recoveries follow two other lawsuits previously filed by representatives of Katerra against former executives.them sued its former chief financial officer Matthew Marsh In March, a $1 million signing bonus was demanded. In April 2022, delegates Sue ousted CEO Michael Marks and other leaders for misusing company funds Purchase personal items, including boxes for Golden State Warriors games.
Katerra opened in 2015 and quickly expanded its reach through acquisitions 20 construction and manufacturing facilities. It has a valuation of more than $4 billion and positions itself as a technology-focused, eco-conscious construction management company that aims to simplify the construction process. In 2021, Greensill Capital, Katerra’s largest lender, filed for bankruptcy months before the construction startup eventually filed for bankruptcy on its own, becoming one of the largest tech startups to fail. Attempts to contact Schick were unsuccessful.