Katerra unsecured creditors file objection to disclosure statement

By Sarah Lizee

Olympia, Wash., Aug. 24 – Katerra, Inc.’s official committee of unsecured creditors objected to the company’s disclosure statement for its Chapter 11 plan, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, the committee also filed a motion seeking termination of the company’s exclusive periods to file and solicit votes on a plan, as well as approval to file its own plan. The motion is currently pending.

“The primary basis for the motion to terminate exclusivity is that the debtor plan includes improper releases of causes of action, including claims against the debtors’ current and former directors and officers, and the committee submits that it is in the best interests of the estates to give creditors the choice to accept the committee’s proposed alternative plan without such releases,” the group said in Tuesday’s objection.

“Relatedly, the committee objects to approval of the debtors’ disclosure statement in its current form, even on a conditional basis, because it does not provide adequate information for creditors to make informed decisions about the proposed releases, and it risks tainting the solicitation process.”

The committee said that, regardless of whether the motion to terminate exclusivity is granted, the debtor’s disclosure statement should include the committee’s summary analysis of potential causes of action against the directors and officers, a conspicuous statement that the committee does not support the debtor plan, an analysis of potential avoidance actions that the debtors propose to release by virtue of creditor acceptance of the debtor plan or failure to affirmatively opt-out of third-party releases, and a creditor recovery analysis.

Katerra is a technology-enabled construction company based in Menlo Park, Calif. The company filed bankruptcy on June 6 under Chapter 11 case number 21-31861.

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