Core Scientific Submits Chapter 11 Bankruptcy Plan
Core Scientific, a bankrupt Bitcoin (BTC) miner, has submitted its Chapter 11 bankruptcy plan. The filing of the plan was submitted to the United States Bankruptcy Court for the Southern District of Texas Houston Division. Negotiations were conducted with key stakeholders, and the document states that the company is “endeavoring to generate as much agreement as possible” regarding the structure of the new Core Scientific after it exits bankruptcy.
The company declared that it had experienced an increase in liquidity since filing for Chapter 11 bankruptcy and is concentrating on reforming its business strategy to make a triumphant return. The company credited its improved fiscal performance to higher Bitcoin values, augmented network hash rate and reduced energy expenditures.
Under Chapter 11 bankruptcy, a business can keep functioning until stakeholders come to an agreement on a reorganization plan. This plan could include downsizing operations to decrease debt or selling assets to pay off creditors. The Chapter 11 bankruptcy plan is the formal document that details how the company plans to restructure itself and reimburse its creditors.
At the time the bankruptcy plan is put into effect, holders of allowed debtor-in-possession (DIP) claims will be completely paid off. They will be given the full amount owed to them either in cash or through an alternative form of payment that has been agreed upon. Additionally, any liens that were put in place to secure the DIP claims will be dissolved, taking away the secured interest in the company’s assets.
Core Scientific Rejects $4.7 Million Demand from Celsius
Core Scientific has rejected a $4.7 million demand from Celsius alleging that they had been “unjustly enriched”.
The bankruptcy court granted Core Scientific authorization to borrow an amount of up to $70 million from the investment bank B. Riley, its largest creditor. This loan would be utilized to settle the bankrupt Bitcoin miner’s current debtor-in-possession financing loan, which was also provided by B. Riley.
On December 21, 2022, Core Scientific declared bankruptcy due to decreased income resulting from the low value of Bitcoin. This filing occurred shortly after a creditor had offered to assist them in avoiding insolvency.
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