Core Scientific Files Chapter 11 Bankruptcy Plan

Core Scientific, a bankrupt Bitcoin miner, filed its Chapter 11 bankruptcy plan.

The plan was submitted to the Houston Division of the Southern District of Texas Bankruptcy Court.

According to the filing, the corporation is “seeking to build as much consensus as possible” regarding how a new Core Scientific might appear after emerging from its bankruptcy proceedings.

The strategy was developed with essential stakeholders.

The business said that since declaring Chapter 11 bankruptcy, its liquidity has increased. It is now concentrating on revising its business strategy to exit bankruptcy successfully.

The company credited rising Bitcoin prices, a faster network hash rate, and lower energy costs for its improved financial performance.

When a company files for Chapter 11 bankruptcy, it can continue to operate until all parties agree on a restructuring strategy, including actions like scaling back operations to pay off debt or selling assets to creditors.

The legal document that describes how the business expects to reorganize itself and pay its creditors is referred to as the Chapter 11 bankruptcy plan.

The bankruptcy plan stated that holders of permitted debtor-in-possession (DIP) claims would get a complete and final settlement of their shares on the bankruptcy plan’s effective date.

They will either receive the agreed-upon alternative treatment or full payment in cash. The company’s assets will no longer be subject to any liens created to secure the DIP claims.

The bankruptcy court had permitted Core Scientific to borrow up to $70 million from investment bank B. Riley, one of the company’s largest creditors.

The money would repay the debtor-in-possession financing loan previously obtained by the bankrupt Bitcoin miner from B. Riley.

On December 21, 2022, Core Scientific declared bankruptcy due to declining sales and low BTC prices. A creditor had recently promised to help Core Scientific avoid bankruptcy when the filing was made.