Three other former Katerra executives have been embroiled in a series of lawsuits seeking damages over alleged breach of contract and promissory note breaches.
The latest lawsuit, which claims more than $3.5 million, marks another chapter in the once-promising startup’s troubled history. The company filed for bankruptcy in 2021. The lawsuits shed further light on the intricate financial arrangements between the defunct company and its executives.
Katerra, once considered a rising star in construction technology, has been embroiled in multiple legal battles on behalf of its bankruptcy trust, demanding that former chief executive Michael Marks and chief financial officer Matthew Marsh Wait for the former executive to pay for the loss.
The company experienced significant operational and financial problems from the start, which eventually led to its closure, leaving behind 1,300 employees. Last month, five executives were indicted, with claims totaling more than $2.3 million. The new lawsuits add another layer of complexity to the defunct startup’s troubles.
The three new lawsuits, all filed on June 1, allege that promissory notes presented to former executives Ashish Kumar Bhardwaj, Mike Rock and Craig Curtis should expire immediately and that the company’s dissolution was an event of default. Their original contract stipulated that the loan would default if a majority of the company’s shares transferred ownership or ceased to exist, the lawsuit said.
Bhardwaj, the company’s president for the Middle East and Asia, is accused of being owed more than $3 million.
The alleged debt stems from two promissory notes Katerra issued to Bhardwaj in 2017 and 2019. According to court documents, the value of the first note is about $151,000, and the value of the second note is about $3 million. The latter was also involved in Bhardwaj’s purchase of the house, which included a loan forgiveness clause that forgave $1 million in outstanding balances.
However, the claim alleges that the forgiveness assignment is revocable because it was made within two years of Katerra’s bankruptcy filing. The suit alleges that Katerra was “insolvent or became insolvent” as a result of the transactions.
The lawsuit was filed against Rock, former head of construction for Katerra’s Western division, and Curtis, head of the firm’s architecture and design division, alleging they defaulted on loans totaling $402,000 and $170,000.
The loans were used to acquire an unspecified amount of shares in the now-defunct startup, the lawsuit said. Katerra is seeking breach of contract damages after Rock and Curtis allegedly failed to repay loans when their contracts were terminated in 2019 and 2020.
