2023-05-26 16:33:14
A crypto-mining company called Core Scientific went public in 2021 at a valuation of $4.3 billion, but in the market downturn following the FTX bankruptcy, its market capitalization fell to $78 million and filed for bankruptcy last December. The so-called However, Chapter 11 bankruptcy provides companies with an opportunity to restructure debts and operations, and according to the company’s lawyers, the company can rise from its ashes by September.
Players in the crypto world are constantly living with change and know that good times are followed by worse, while bad times are followed by better times. Perhaps this is the motto of the optimistic outlook, but also for Core Scientific, which is currently undergoing bankruptcy proceedings, when its lawyers promise that the reorganization plan, which is the key to survival, can be completed by September 25. However, the company’s creditors are growing impatient and are not satisfied with the progress.
Lenders are unhappy with the progress
Although according to the law, Core Scientific can indeed delay the process until the fall thanks to an extension request, the federal bankruptcy judge called on the company’s managers to come up with their plans as soon as possible, because this is the only way to ensure peace of mind for creditors. According to bankruptcy trustee David R. Jones, the process should be accelerated by at least one month, because “creditors want the company to present its restructuring plans as quickly as possible, practically by yesterday’s deadline.”
Creditors of Core Scientific have been trying to put pressure on the company for months. The bankruptcy proceedings, which were originally planned to last six months, began in December 2022, but it looks like it will last much longer than that, leaving creditors in doubt. Thomas Bean, a MassMutual A representative of a financial company called Core Scientific spoke out once morest accepting Core Scientific’s request for an extension, claiming that it would only give the company the authority to do their work more slowly. MassMutual sees the debtor as using their money while defaulting on their claims.
In the world of mining, it is very difficult to create a realistic business plan now
The consultant of Core Scientific explains the complicated process by saying that more time is needed to develop a business plan, because the conditions affecting the mining industry are constantly changing: “bitcoin price and hashrate have been rising in the recent period, while electricity prices have been falling. Together, these factors increased the profitability of the mine and allowed Core Scientific to generate more revenue and pay off its $6 million in debt.” – said Ronit Berkovich, attorney for debtors.
Jared Roche, a 36th Street Capital and the lawyer of other creditors highlighted the improving market conditions and said that given the favorable factors, Core Scientific is obliged to adapt as quickly as possible: “The debtor claims that they need time to deal with the changing business conditions in the industry, but at the moment constant change is also a feature of the crypto industry, i.e. change is part of the business.” Roche said. “It’s an immature industry that’s constantly evolving.”
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