(Bloomberg) — Construction firm Katerra Inc. filed for bankruptcy protection in the U.S., bookending the implosion of a startup that raised about $2 billion from investors including SoftBank Group Corp.
The company filed Chapter 11 proceedings in the Southern District of Texas court. It estimated liabilities of $1 billion to $10 billion and assets of $500 million to $1 billion. The company said in a separate statement it has secured $35 million of debtor-in-possession financing from an arm of SoftBank, a lifeline to tide it over.
The collapse of Katerra — founded in 2015 with a promise to shake up a staid construction industry — is a stinging defeat for SoftBank, which made a large bet on its transformative potential. Major cash infusions from SoftBank and others helped Katerra grow quickly, in part by acquiring smaller companies. But integrating those businesses proved difficult, and the company was forced to deal with building delays and issues in trying to perfect its construction modules.
In May, SoftBank founder Masayoshi Son mentioned Katerra among investments where it made mistakes, along with WeWork and Greensill. But he argued that SoftBank’s successes have more than made up for such missteps. Credit Suisse Group is preparing to sue SoftBank over the collapse of Greensill and about $440 million in funds that Katerra owes the bank’s clients, the Financial Times has reported, citing unidentified people familiar with plans.
“Our multi-step action plan has rapidly evolved and includes consolidating U.S. activities, continuing our international businesses, advancing key asset sales, securing DIP financing, and commencing an in-court restructuring process.,” Katerra Chief Transformation Officer Marc Liebman said in the statement.
Read more: SoftBank-Backed Construction Startup Katerra to Shut Down
Katerra ranks alongside WeWork as one of the more spectacular collapses in SoftBank’s portfolio.
Katerra had promised to shake up the construction sector with efficient factories, prefab parts and modular construction units. The company has said it was working in countries including the U.S., India and Saudi Arabia. In February of last year, its marketing materials touted 8,000 employees across the globe.
In 2019, Katerra said it would cut 200 jobs, even after raising $865 million from investors the previous year. The company also shut down a factory in Phoenix, with the intention of focusing on a more highly automated facility in California.
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