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Katerra identified improper revenue recognition
Katerra identified improper revenue recognition
Also in May 2020 Katerra Cayman identified potential improper revenue recognition practices. An independent committee of Katerra Cayman’s Board was formed to investigate. As a result of Katerra Cayman’s investigation into improper revenue recognition practices, SVF1 exercised its contractual right to withhold the additional $100 million of financing scheduled for August 2020. The full $100 million sum was ultimately advanced to Katerra Cayman in September 2020.
During the investigation into improper revenue recognition practices, the Katerra Group continued to face worsening liquidity. The Katerra Group experienced financial and technical setbacks on legacy construction projects due to re-work issues related to earlier-completed work. These issues were exacerbated by the impact of Covid-19 on the Katerra Group’s business, which caused delay, reduced gross margins and increased the cost of labour and materials.
- Heading
- INTRODUCTION
- The claimants
- The defendants
- The Greensill Group and supply chain funding
- The SCF Funds
- The securitised funding arrangements
- The SoftBank Defendants’ relationships with the Greensill Group
- The Credit Enhancement Programme
- The Katerra Group companies
- The SoftBank Defendants’ investments in the Katerra Group companies
- 2019 discussions about revisions to the Credit Enhancement Programme
- The Fairymead Note Programme
- December 2019: further discussions about the CEP
- The issue of notes under the Fairymead Note Programme
- 2020: Financial stress in the Katerra Group
- SVF1 invested further in Katerra
- Katerra identified improper revenue recognition
- Appointment of new management and restructuring advisors
- Developments concerning the Greensill Group in 2020
- CSAM reduced concentration limits on Greensill Group investments
- GCPL planned a capital raise and Initial Public Offering
- Drafts of the $440 million CLN and the Omnibus Deed
- The 10 November 2020 agreements
- The $440m CLN
- The Omnibus Deed
- The SBIA Undertaking
- Use of the $440 million proceeds of the CLN
- Further developments in November 2020 concerning the Katerra Group
- SVF1’s bridge loan to the Katerra Group
- SVF1’s, SVF2’s and the Greensill Group’s approvals following the withdrawal of the New Money Consortium
- Documenting the agreements
- Signing of the CEA and TA and placing them in escrow
- Further agreements executed in December 2020
- The CEA
- The TA
- Further investments in Katerra Cayman by SVF1
- The Preferred Share Purchase Agreement
- The SVF Habitat Share Subscription
- The Vision Funds’ stake in the Katerra Group
- November to December 2020: developments concerning the Fairymead Note Programme
- December 2020 – March 2021: Financial position of the Greensill Group
- Discussions between Greensill and CSAM in December 2020 about exposure limits
- The 31 Dec/14 Jan Fairymead Trade – “the Secondary Trade”
- Publicity about the restructuring of the Katerra Group’s debts
- The cancellation of the Secondary Trade
- March – June 2021: Default on the Fairymead Notes and bankruptcy of the Greensill Group and Katerra Group
- WITNESSES
- FINDINGS ON CONTESTED FACTUAL AND EXPERT ISSUES
- SECTION 423 OF THE INSOLVENCY ACT 1986
- DETERMINATION OF THE ELEMENTS OF THE CLAIM
- Conclusions