US Core Scientific Files for Chapter 11 Plan of Reorganization

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US Core Scientific Files for Chapter 11 Plan of Reorganization

The United States Bitcoin miner Core Scientific has filed a Chapter 11 bankruptcy plan in the United States Bankruptcy Court for the Southern District of Texas Houston Division.

The blockchain computing data center providers submitted the document to the bankruptcy court on June 21. Core Scientific’s new filing plan is described as a “joint chapter 11 plan of reorganization.” For context, a Chapter 11 plan of reorganization allows a business to keep its operation active and pay creditors with time.

According to the introduction of the filing, holders of interest and claims are allowed to vote on the plan to be either accepted or rejected. The company revealed that it has experienced a liquidity boost since it filed for Chapter 11 and is working hard to revamp its business plan.

Furthermore, higher Bitcoin pricing, increased network hash rate, and lower energy costs were cited as reasons for the company’s improved financial performance. Also, the filing noted that the reorganization plan is subject to change as the court has not yet approved it.

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Related Reading: Banq Files for Chapter 11 Bankruptcy Protection

Nevertheless, if the filing is approved by the court, holders of debtor-in-possession claims will get complete satisfaction. Consequently, the claims will be retrieved either through full payment in cash or other methods the claim holders have agreed upon. The company’s assets will no longer be subject to any liens that were created to secure the debtor-in-possession (DIP) claims.

Furthermore, Core Scientific has been granted permission by the court to collect up to $70 million in loans from one of the firm’s biggest creditors, B. Riley investment bank. This loan would be used to clear the blockchain company’s DIB financing loan.

Recall that in December 2022, Core Scientific previously filed for bankruptcy. During that time, the company reported about $10 billion in liabilities as well as having over 1,000 creditors. The reason for the filing was due to its falling revenue in the middle of a crypto market crash.

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Victor Nnamdi Igbor "Swaezy" is a crypto enthusiast and writer with over 8 experience in blogging. He is an easy person and when not working, loves to have a good time.