Katerra, the US construction start-up backed by SoftBank’s Vision Fund, has filed for bankruptcy with more than $1 billion in liabilities, becoming the second leading company in the Japanese conglomerate’s portfolio to collapse this year.
In a statement, Katerra said it had filed for creditor protection following a “rapid deterioration in the company’s financial position”. It blamed Covid-19, the “unexpected insolvency” of its former lender Greensill Capital and the inability to secure new financing. The company said it would undertake a marketing and sales process “to maximize value for its stakeholders.”
The bankruptcy marks the latest setback for SoftBank’s Vision Fund, which has recently had a strong run from the listings of portfolio companies such as Coupang and DoorDash. The Vision Fund was reported to have invested more than $2 billion in Katerra, including a cash injection in December as part of a recapitalization.
Katerra was a customer of Greensill, the SoftBank-backed supply chain finance company, which itself collapsed earlier this year. Katerra did not mention Greensill in the statement.
Founded in Silicon Valley, Katerra has raised billions of dollars in an effort to reduce construction costs by manufacturing building components in factories rather than on site.
But the company has struggled to control costs and has faced delays on several major projects. Internal drama led to the departure of co-founder Michael Marks as CEO in May last year.
Katerra said it had received $35 million in debt financing from SoftBank, which would allow the company to continue operating while the bankruptcy process unfolds, and its international operations would not be affected by the bankruptcy. The company estimated that it had assets between $500 million and $1 billion and liabilities of $1 billion to $10 billion. SoftBank declined to comment.
Court records in the state of Texas showed that Katerra made about $1.75 billion in revenue last year. The company has nearly 2,400 employees, according to LinkedIn.
Katerra’s collapse has sparked tensions between SoftBank and Credit Suisse, which sold funds pooling loans from Greensill.
Credit Suisse is seeking to recover approximately $440 million in debt related to Katerra that was in the funds. The The Washington City Times reported last week that the Swiss bank is preparing for possible lawsuits against SoftBank, one of its main clients, after the collapse of Greensill.
In November last year, SoftBank gave Greensill an emergency power injection to cover Katerra’s debts. However, the money never reached the Credit Suisse funds as intended, the The Washington City Times reported.