Embattled Bitcoin miner, Core Scientific, has taken a major step towards financial recovery by filing its Chapter 11 bankruptcy plan. The paperwork was submitted in the United States Bankruptcy Court for the Southern District of Texas Houston Division, following negotiations with key stakeholders.
The firm is striving to build a broad consensus on its future trajectory as it emerges from bankruptcy proceedings. Core Scientific has experienced an uptick in liquidity since filing for Chapter 11 bankruptcy and is now pivoting towards restructuring its business plan for a triumphant comeback. The company has attributed its improved fiscal performance to higher Bitcoin prices, an upsurge in network hash rate, and a reduction in energy costs.
Chapter 11 bankruptcy allows a firm to continue operating while stakeholders deliberate on a restructuring plan. A strategic plan like this may encompass measures such as scaling down business operations to cut debt or liquidating assets to reimburse creditors. The bankruptcy plan submitted by Core Scientific outlines how the company plans to reorganize itself and repay its creditors.
Also Read: Core Scientific’s Steady Progress Towards Bankruptcy Exit
According to the bankruptcy plan, holders of allowed debtor-in-possession (DIP) claims will receive full and final satisfaction of their claims on the effective date of the bankruptcy plan. This satisfaction will either come in the form of full cash payment or alternative treatment that has been agreed upon. Any liens granted to secure the DIP claims will also be terminated, thus eliminating the secured interest over the company’s assets.
Core Scientific had previously received approval from the bankruptcy court to secure a loan of up to $70 million from B. Riley, one of the firm’s largest creditors. This loan is intended to pay off the existing debtor-in-possession financing loan, which also originated from B. Riley.
The company had filed for bankruptcy on Dec. 21, 2022, due to dwindling revenue amid low BTC prices. The filing occurred shortly after a creditor proposed assistance to Core Scientific to avert potential bankruptcy.
