Core Scientific, a Bitcoin miner, files Chapter 11 plan.

The Bitcoin mining company Core Scientific has filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of Texas Houston Division. The company has negotiated a plan with key stakeholders and aims to build consensus on what Core Scientific will look like after emerging from bankruptcy. The company has seen an increase in liquidity since filing for bankruptcy and plans to revamp its business plan to make a successful comeback. The company attributes its improved financial performance to higher Bitcoin prices, increased network hash rate, and reduced energy costs.

A Chapter 11 bankruptcy allows a company to continue operating while stakeholders agree on a restructuring plan, which could involve downsizing operations to reduce debt or liquidating assets to repay creditors. The Chapter 11 bankruptcy plan outlines how the company intends to reorganize and repay its creditors.

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

Core Scientific has 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. The loan will be used to pay off the company’s existing debtor-in-possession financing loan, which also came from B. Riley.

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The bankruptcy filing came after falling revenues due to low BTC prices, and just after a creditor offered to help Core Scientific avoid possible bankruptcy.

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