Crypto mining firm Core Scientific Inc. won court approval to exit bankruptcy and implement a restructuring plan that trims about $400 million in debt from its balance sheet and fully repays company creditors thanks largely to a turnaround in Bitcoin prices over the last year.
Judge Christopher Lopez said Tuesday he’d confirm Core Scientific’s Chapter 11 exit plan, a decision that clears the firm to emerge from bankruptcy later this month. Core Scientific said during a court hearing the company anticipates its shares will be re-listed on the Nasdaq on Jan. 24. Core Scientific filed for Chapter 11 in December 2022 amid falling crypto prices and a string of major industry failures including the bankruptcies of Sam Bankman-Fried’s FTX, crypto lender Celsius Network LLC and crypto hedge fund Three Arrows Capital.
But Core Scientific and its creditors fared far better in Chapter 11 than its bankrupt peers and saw its fortunes turn thanks to higher Bitcoin prices and lower energy costs. Bitcoin was trading on Tuesday at more than $43,000 — up from about $16,800 when Core Scientific filed Chapter 11 in late 2022. Core Scientific was also able to strike a series of settlements with different creditor groups, including lender B. Riley.
Under the approved restructuring plan, Core Scientific creditors have agreed to swap about $400 million in debt for equity in the reorganized business. The firm also secured new financing in the form of a $55 million rights offering and $80 million exit facility from its existing bondholders. The plan also saves about 240 jobs, according to court documents. Core Scientific’s restructuring provides “tremendous recovery” for creditors and existing shareholders who were permitted to participate in the rights offering, Judge Lopez said Tuesday. Providing any value to Core Scientific shareholders is unusual because equity is usually wiped-out in bankruptcy, the judge said.
The bankruptcy is Core Scientific Inc., 22-90341, U.S. Bankruptcy Court for the Southern District of Texas (Houston).
