Is KB Home heading to bankruptcy court?
Another strain that could send KB into bankruptcy is litigation associated with the options scandal. The board’s ouster of Karatz instantly made him and the company high-profile potential targets for federal prosecutors, legal experts told The Los Angeles Times. As the head of a business with $10 billion in annual sales, Karatz automatically would present a higher priority to government investigators than executives who ran smaller companies facing similar options scandals, several attorneys told the Times. There are about 150 companies facing similar options investigations. Legal experts say companies naturally would prefer not to dismiss executives because doing so can imply wrongdoing by the company and invite lawsuits from angry shareholders.
