Bankrupt Bitcoin miner Core Scientific has submitted its Chapter 11 bankruptcy plan to the Houston Division of the Southern District of Texas Bankruptcy Court. The filing indicates the company’s active pursuit of consensus from key stakeholders regarding the vision for a restructured Core Scientific post-bankruptcy.
According to the bankruptcy plan, holders of permitted debtor-in-possession (DIP) claims will receive complete and final settlement of their claims on the effective date of the bankruptcy plan. These holders may receive agreed-upon alternative treatment or full cash payment, with any liens previously established to secure the DIP claims no longer burdening the company’s assets.
Chapter 11 bankruptcy allows companies to continue operations while working towards a consensus on a restructuring strategy. This strategy may involve streamlining operations to repay debts or selling assets to satisfy creditors. The Chapter 11 bankruptcy plan is the official document outlining the company’s anticipated reorganization and debt repayment plan.
Core Scientific filed for bankruptcy on December 21, 2022, citing falling revenue and low BTC prices, rising energy cost, and unpaid $7 million debt from crypto lender, Celsius Network as the reasons for its bankruptcy. Core Scientific was one of the largest publicly traded crypto mining companies in the U.S., and its bankruptcy is a sign of the financial challenges facing the crypto mining industry. According to court documents, Core Scientific reported a net loss of $434.8 million for the three months ended September 30, 2022. At the time the company filed for bankruptcy, it had only $4 million in cash on hand.
Following the bankruptcy filing, the bankruptcy court granted Core Scientific authorization to borrow up to $70 million from B. Riley, an investment bank and one of the company’s major creditors. The purpose of this loan was to repay the debtor-in-possession financing loan previously obtained by the bankrupt Bitcoin miner from B. Riley.
Since declaring Chapter 11 bankruptcy, Core Scientific has improved its liquidity position and is now focused on revising its business strategy to successfully emerge from the bankruptcy proceedings. The company attributes its enhanced financial performance to the surge in Bitcoin prices, an accelerated network hash rate, and reduced energy costs.
If you want to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.
“Take control of your crypto portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”
