Real Estate

Katerra files for relief under Chapter 11 of Bankruptcy Code

V Rishi Kumar Hyderabad | Updated on June 07, 2021

Commences US Court-supervised financial restructuring; obtains $35 mn in debtor-in-possession financing.

Katerra, a technology-enabled US construction company, has announced that the company and certain of its US and Cayman Island entities have voluntarily filed for relief under Chapter 11 of the US Bankruptcy Code in the United States Bankruptcy Court.

Along with it, the company, which has operations in India and other markets, takes steps to conduct a sale process to maximize stakeholder value.

Katerra said it secured commitments for $35 million in Debtor-in-Possession (DIP) financing from SB Investment Advisers (UK) to fund operations during the Chapter 11 process.

The company’s international operations are not affected by this filing, it informed in a statement.

“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 path forward for Katerra and its stakeholders,” said Chief Transformation Officer Marc Liebman.

“Our multi-step action plan has rapidly evolved and includes consolidating US activities, continuing our international businesses, advancing key asset sales, securing DIP financing, and commencing an in-court restructuring process,” he said.

The company is proceeding with specific active projects. It has entered into commitments for the sale of the Renovations and Lord Aeck Sargent architecture business lines to private buyers, subject to Bankruptcy Court approval.

The rapid deterioration of the company’s financial position result from the macroeconomic effects of the Covid-19 pandemic on the construction industry, the unexpected insolvency proceedings of Katerra’s former lender, and unsuccessful attempts to secure additional capital and business.

Katerra has hired Kirkland & Ellis as legal advisor, Houlihan Lokey as an investment banker and Alvarez & Marsal as financial advisor to work with the management team to conduct a marketing and sale process for its assets to maximise value for Katerra’s stakeholders and otherwise facilitate the orderly wind-down of its business.

Members of the financial advisor firm are working with regional business unit leadership to manage day-to-day operations.

Published on June 07, 2021

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