A major company currently managing and building several prominent Hudson County projects could be closing up shop amid several media reports detailing their financial woes and structural problems.
According to details first published by The Information, California-based Katerra has started telling employees they plan to cease operations. The SoftBank-backed company’s collapse would be a notable fall from grace, as they had raised more than $2 billion to slash the cost of building apartments when they were founded in 2015.
Katerra acquired Hoboken-based Fields Construction in 2018 and inherited many of their projects when the deal was finalized. Jersey City has several developments currently being built that fall under Katerra’s umbrella including 26 Cottage Street, 170 Erie Street, and a 99-unit project at 3060 John F. Kennedy Boulevard.
It is unclear how Katerra’s New Jersey projects will be impacted by the potential shutdown, but The Information quoted one official as saying Katerra is likely to walk away from dozens of construction projects it had agreed to build. Thousands of employees are expected to be let go from the company, whose accounting practices were investigated by the Securities and Exchange Commission last year.
Sources close to the situation indicate that an executive at Katerra told employees during a Tuesday video call that the firm does not have enough money to pay severance packages or compensate workers for unused paid time off. The impact of COVID-19, as well as rising costs of labor and construction materials, were largely blamed for the situation.
Katerra, founded by electronics industry veteran Michael Marks, is the second company backed by SoftBank’s Vision Fund to shut down this year following the collapse of financial technology firm Greensill Capital. The board of directors voted to fire Marks last spring and Katerra’s most recent chief, Paal Kibsgaard, stepped down last month.
The company is currently being led by representatives of New York-based consulting firm Alvarez & Marsal, who specialize in turnaround management. Katerra has not made any official announcement or statement about the company shutting down, a move that could have a significant impact on Jersey City’s development scene.