More Former Katerra Execs Sued, Bankruptcy Trust Seeking $3.5M

Three more former Katerra executives have been dragged into a string of lawsuits seeking damages for allegations of breach of contract and promissory note defaults.

The latest lawsuits, which seek more than $3.5 million, mark another chapter in the troubled history of the once-promising startup, which filed for bankruptcy in 2021. The lawsuits shed additional light on the intricate financial arrangements between the shuttered company and its executives.

Katerra, once seen as a rising star in the construction technology sector, has been entangled in numerous legal battles on behalf of its bankruptcy trust seeking damages from former executives including former CEO Michael Marks and CFO Matthew Marsh.

The company experienced significant operational and financial issues from the start that would eventually bring it to its knees, leaving 1,300 workers in its wake. Last month, five executives were sued for a combined total of over $2.3 million. These new lawsuits add another layer of complexity to the shuttered start-up’s troubles.

The trio of new lawsuits, all filed on June 1, claim that promissory notes gifted to former executives Ashish Kumar Bhardwaj, Mike Rock and Craig Curtis are due immediately, citing the company’s dissolution as an event of default. Their original contracts outlined an event of default would occur on the loans should a majority of the company’s shares shift ownership or cease to exist, according to the lawsuit.

Bhardwaj, who was the company’s president of the Middle East and Asia, is accused of owing over $3 million.

The alleged debt comes from two promissory notes Katerra issued to Bhardwaj in 2017 and 2019. The first note was valued at about $151,000 while the second note amounted to $3 million, according to court documents. The latter, which was also involved in Bhardwaj’s purchase of a home, contained a loan forgiveness provision that pardoned $1 million of the outstanding balance.

However, the claim argues that the forgiveness transfer is voidable because it was made within two years of Katerra’s bankruptcy filing. The lawsuit claims Katerra was “insolvent or became insolvent” as a result of the transactions.

Suits filed against Rock, former head of construction in Katerra’s west division, and Curtis, who led the company’s architecture and design department, accuse them of defaulting on loans totaling $402,000 and $170,000, respectively.

The loans were used to acquire an unspecified number of shares in the now-defunct startup, according to the lawsuit. Katerra is seeking damages for breach of contract after Rock and Curtis allegedly failed to pay back the loans upon their terminations in 2019 and 2020.