Core Scientific, a bankrupt Bitcoin miner, presents Chapter 11 plan and is optimistic about successful revival.
The US-based Bitcoin mining company, Core Scientific, which has been facing difficulties, has filed for reorganization under Chapter 11 of the US bankruptcy law. The company aims to convert debt to equity for its creditors.
Core Scientific filed for bankruptcy in the Southern District of Texas on Wednesday, and according to the restructuring plan agreed upon by a group of creditors, the mining firm will convert 97% of its debt into ownership of the company.
The current shareholders of Core Scientific will also retain some ownership of the company, avoiding a complete loss.
The plan will allow Core Scientific to eliminate its debt of hundreds of millions of dollars, which will also reduce its annual interest expenses significantly.
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The company said that it is trying to achieve as much consensus as possible regarding its new restructuring plan after the bankruptcy proceedings, and it remains optimistic about the future revival of its business.
The court needs to approve the restructuring proposal.
Plan comes six months after bankruptcy
The reorganization plan is the result of negotiations with key stakeholders, and it comes six months after the company filed for bankruptcy protection.
Core Scientific attributed its bankruptcy to a $7 million unpaid debt from the bankrupt cryptocurrency lender, Celsius Network.
The company also reported a net loss of $434.8 million for the three months ending September 30, 2022, and had only $4 million in liquidity at the time of its bankruptcy filing.
Core Scientific’s shares, which are traded on the over-the-counter (OTC) market under the ticker CORZQ, rose more than 11% on Wednesday, the day the plan was made public.
The stock continued to rise on Thursday, with a 12% increase, due to a generally positive sentiment in the spot Bitcoin market.
Over the past 12 months, the stock remains down by 76%, trading at a price of $0.51.