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What Katerra's shutdown means for clients, subsidiaries – The Real Deal Los Angeles

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Date: 2021-06-04 23:34:03

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The sudden closure of Katerra put clients and subsidiaries in dire straits. (Getty)

Last week, a “groan” from a Katerra employee arrived at developer Paul Silverman on a Jersey City project site. Then he found out that the ominous story was true: Katerra shut down.

Many developers are now in a similar position to Silverman and suddenly wondering how to proceed with a project without a construction manager.

A company named after Silverman hired Fields Construction, one of the many companies acquired by Katerra in the last few years, he said, saying his own company has already taken over the construction of the project. It was. On Thursday, at 170 Erie Street, a crane was seen loading drywall on the upper floors of the apartment to be built.

But he said companies with no experience in construction management would not be very agile.

“There will be many developers who will be dramatically delayed,” he said.

There were many Warning display It leads to the collapse of Katara. Most recently, SoftBank Group has provided Katerra with more than $ 2 billion in bailouts. The move saved construction tech startups from bankruptcy, and SoftBank acquired a majority stake in the company. The deal also canceled the $ 435 million debt owed by Katera’s SoftBank-backed financial services firm Greensill Capital, the Wall Street Journal reported at the time.The arrangement is Reportedly The center of the proceedings planned by Credit Suisse.

Since its inception in 2015, Katerra has aimed to be a one-stop shop that employs building technology to handle various aspects of the construction process and reduce costs and project timelines. It grew rapidly with the support of venture companies and acquired more than 20 companies. But that dramatic rise was spoiled by CEO changes and a series of layoffs. Factory closed And a controversial track record regarding the provision of projects.And like any other Companies funded by Softbank, There was no clear path to monetization.

information Reported this week The company suddenly told its employees that it would close the company without paying severance pay or unused leave. The company has not yet officially announced the closure, and representatives have responded to phone calls and emails asking for comment. not.

It is not yet clear what will happen to all Katerra projects and acquired companies.

“The sad news from Katerra has finalized the details to take full control of the company,” said Eric Karsh, founder of Equilibrium Consulting, a structural consulting firm acquired by Katerra in 2018. It was.

“We do our best to all Katerra staff and regret that this news affects many people, but we hope that all these highly talented people will find exciting new challenges. believe”

Michael Green, who acquired the construction company MGA for Katerra in 2018, said he has been concerned about Katerra’s finances since SoftBank’s bailout. According to him, the company has been working for months to become independent of Catera, and an agreement is nearing its final. According to Green, his company always runs “contractually” with Katerra when working on projects, and most of the work comes from other clients.

He said he wasn’t surprised by Katerra’s closure, but he was disappointed. He hoped the startup could work with SMEs to provide a path for industry change, including reducing construction costs, prioritizing environmentally friendly designs, and accelerating the construction process. ..

“I was disappointed that it didn’t happen in the end, but I realized that the disagreement in leadership values ​​also shifted from real impact to economic gain and lacked a clear direction.” “It’s nothing new to today’s enterprise, but it’s neither necessary nor wise.”

Original Source: https://californianewstimes.com/what-katerras-shutdown-means-for-clients-subsidiaries-the-real-deal-los-angeles/378850/