June 10, 2021
Danning Gill partner Zev Shechtman was quoted in Globe St. about construction firm Katerra Inc. that had bragged of “breaking new ground in the building industry.” But its recent bankruptcy filing in the Southern District of Texas was a more recognizable collection of issues including a potential over extension, pandemic-driven problems, questions about accounting procedures, and then tumbling support by wary investors complicated business as usual for the six-year-old company with nearly $3 billion invested in the startup.
“They had a vision, they borrowed a lot of money on the basis of this vision, then they sought to disrupt the construction industry,” Shechtman.
Globe. St. also reported that the pace of growth was one likely factor in the events. Acquisition and integration of businesses is a challenge to any company. A startup like Katerra doing more than three acquisitions a year is no exception. The positioning of the company may have played another role.
“There’s a lot in here about this financial problem and I think that’s going to be a big part of the story,” Shechtman says of the filing he reviewed. “There’s a lot to unpack here about what happened financially, which kind of business mistakes were made, what kind of lending mistakes were made, and institutional oversight.”
To read the full article, click here.