Bitcoin miner Core Scientific has filed a Chapter 11 plan with the United States bankruptcy court for the Southern District of Texas Houston Division. A Chapter 11 bankruptcy allows a company to continue operating while stakeholders work on agreeing to a restructuring plan. Core Scientific stated that it is seeking consensus on how it will look after emerging from bankruptcy proceedings. The company has seen an increase in liquidity since filing for bankruptcy and attributed its improved financial performance to higher bitcoin prices, increased network hash rate, and reduced energy costs.
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, either receiving full payment in cash or agreed-upon alternative treatment. Any liens granted to secure the DIP claims will be terminated, removing the secured interest over the company’s assets. Core Scientific received permission from the bankruptcy court to take out a loan of up to $70 million from investment bank B. Riley, one of the company’s biggest creditors, which would be used to pay off the bankrupt Bitcoin miner’s existing debtor-in-possession financing loan.
Core Scientific filed for bankruptcy in December 2022 due to falling revenue and low BTC prices, just after a creditor offered to help the company avoid possible bankruptcy.