The creditors of the crypto miner have become more and more impatient with the company’s attempts to create a plan to restructure its finances.
During a court hearing on Monday, the federal judge in charge of Core Scientific’s bankruptcy case suggested that the company should shorten its restructuring timeline by at least one month. Creditors are urging the financially troubled crypto miner to accelerate its efforts to emerge from Chapter 11 bankruptcy.
According to Core Scientific’s legal representative, the crypto miner expects to develop a reorganization plan by September 25th. This target date takes into account a 90-day exclusivity extension granted to the company to devise a strategy for debt repayment. However, U.S. Bankruptcy Judge David R. Jones, from the Southern District of Texas, stated that the company has the potential to expedite the process further in order to satisfy its creditors.
Judge David R. Jones stated that if there is a desire for a faster and more immediate approach to the process, Core Scientific can certainly expedite it.
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Core Scientific’s creditors have been in disagreement for several months regarding the company’s bankruptcy proceedings. The proceedings started in December 2022 and were initially expected to conclude in six months. However, it seems likely that they will extend for almost a year, which has caused frustration among the company’s extensive list of creditors.
Thomas Bean, the representative for creditor MassMutual, opposed Core Scientific’s request for an extension, stating that it would encourage the company to intentionally delay the case.
Bean expressed that Core Scientific has been utilizing their collateral for several months without making any payments to the equipment lenders.
On the other hand, Core Scientific’s legal representative argued that they needed additional time to develop a business plan that can adjust to the changing dynamics of the unpredictable crypto mining industry. They mentioned the fluctuating prices of bitcoin and hash rates, along with the decreasing electricity costs, as factors influencing the need for adaptation.
Ronit Berkovich, an attorney representing Core Scientific, stated that the combination of these factors has increased the profitability of mining, enabling the company to generate more revenue and allocate it towards paying off $6 million of its debt.
Jared Roche, an attorney representing 36th Street Capital and other creditors, argued that considering the current conditions and Core Scientific’s extensive experience in the crypto industry, the company has a responsibility to be more responsive and adapt swiftly to the changing dynamics of the crypto industry.
Roche remarked, “The debtor claims they require time to handle the changing business conditions in the industry, but that’s how the crypto industry is currently. It’s an industry that is still developing and continuously changing.”
Core Scientific, once the biggest mining company in the crypto industry, experienced a remarkable and rapid decline in November. This decline occurred when bitcoin prices drastically dropped due to the collapse of cryptocurrency exchange FTX in mid-November. In 2021, the company went public with a valuation of $4.3 billion, but when it filed for bankruptcy in December, its market capitalization had plummeted to $78 million.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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