Defunct Katerra sues more former execs

Former president and VP of software among employees sued, accused of breach of contract

From left: Former Katerra executives Matthew Ryan, Samantha Rist, Trevor Schick and Nicholas Brathwaite (Getty, LinkedIn)
From left: Former Katerra executives Matthew Ryan, Samantha Rist, Trevor Schick and Nicholas Brathwaite (Getty, LinkedIn)

Shuttered construction company Katerra unleashed a slew of lawsuits last week against five former shareholders, alleging breach of contract. The lawsuits were filed between April 28 and May 2 in the U.S. Bankruptcy Court Southern District of Texas on behalf of Katerra, its creditors and its bankruptcy plan administrator. They seek more than $2.3 million from former executives and employees. 

The largest suit is against former Katerra president Trevor Schick, who is accused of breaching a contract worth $1.1 million. As part of a retention bonus in 2017, Schick entered an agreement in which his former employer loaned him money to purchase company stock, according to the lawsuit. The loan was secured by the purchased shares themselves, a financing arrangement commonly referred to as an employee stock purchase loan. The agreement stipulated that Schick would have to pay back the loan if he sold any shares, according to the lawsuit. Schick sold 250,000 shares that were purchased with the loan in March 2018, triggering a default, the suit states. Katerra, which went belly up in 2021, is now seeking the original loan amount, plus interest and fees.

Mismanagement was at the heart of many of Katerra’s financial woes as the company was investigated by the Securities Exchange Committee in 2021 following misrepresentation of revenue and operating margins in company filings. A string of misfortunes followed, including layoffs, delayed deliveries, factory closures and leadership shakeups.  The company  “experienced approximately $2.78 billion in financial losses” between 2018 and 2020, according to one of the lawsuits. 

In another lawsuit filed last week, Matthew Ryan, former Katerra head of manufacturing, is also accused of failing to repay loans he used to purchase company shares in 2017. The loans defaulted due to the company’s dissolution in 2021, and Ryan is alleged to owe $810,000 as of January 2023, which included the principal amount and accrued interest. 

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The other suits were against the former head of development Nicholas Brathwaite, former vice president of software Abhijit Oak and former head of human resources Samantha Rist. Rist, Oak and Brathwaite are similarly accused of defaulting on loans used to purchase shares totaling $104,00, $162,000 and $168,000, respectively. Katerra is seeking damages for breach of contract, and it alleges that the five former execs have been “unjustly enriched” by accepting and retaining benefits conferred by Katerra.

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These clawback actions come on the heels of two other lawsuits Katerra representatives previously filed against former executives. They sued its former CFO, Matthew Marsh in March, demanding the repayment of a $1 million signing bonus. In April 2022, the representatives sued ousted CEO Michael Marks and other leaders for misusing company funds to purchase personal goods including a box at Golden State Warriors games.

Katerra opened its doors in 2015 and rapidly expanded its footprint by acquiring 20 construction and manufacturing facilities. It was valued at upwards of $4 billion and positioned itself as a tech-centric, eco-conscious construction management firm that simplified the construction process. In 2021, Katerra’s largest lender, Greensill Capital, filed for bankruptcy months before the construction start-up ended up filing itself, becoming one of the largest tech startups to shut its doors. Attempts to reach Schick were unsuccessful. 

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