Bitcoin miner Core Scientific files its Chapter 11 plan

A Chapter 11 plan for bankrupt Bitcoin (BTC) miner Core Scientific has been filed in line with its Chapter 11 proceedings.

The plan was filed in the United States bankruptcy court for the Southern District of Texas Houston Division. The plan was negotiated with key stakeholders and according to the filing, the firm is “seeking to build as much consensus as possible” about how a new Core Scientific would look after emerging from its bankruptcy proceedings.

Cryptocurrency miner Core Scientific said it has seen a boost in liquidity since filing for Chapter 11 bankruptcy and is focused on revamping its business plan to make a successful comeback. The company attributed its improved financial performance to higher bitcoin prices, increased network hash rate and reduced energy costs.

A Chapter 11 bankruptcy allows a firm to continue operating until stakeholders are able to agree on a restructuring plan which could involve measures such as the downsizing of business operations to reduce debt or the liquidation of assets to repay creditors. The Chapter 11 bankruptcy plan refers to the formal document that outlines how the company intends to reorganize itself and repay its creditors.

The bankruptcy plan explained that on the effective date of the bankruptcy plan, holders of allowed debtor-in-possession (DIP) claims will receive full and final satisfaction of their claims. They will either receive full payment in cash or agreed-upon alternative treatment. Additionally, any liens granted to secure the DIP claims will be terminated, removing the secured interest over the company's assets.

Core Scientific had received permission from the bankruptcy court for the Southern District of Texas to take out a loan of up to $70 million from investment bank B. Riley, one of the company’s biggest creditors. The loan would be used to pay off the bankrupt Bitcoin miner’s existing debtor-in-possession financing loan, which also came from B. Riley.

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Core Scientific filed for bankruptcy on Dec. 21, 2022, owing to falling revenue and low BTC prices. This happened just after a creditor offered to help Core Scientific avoid possible bankruptcy.

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