With the aid of the loan, Core Scientific would be able to maintain its mining and hosting activities while reorganizing temporary authorization to get a $37.4 million loan from current creditors to support it in the face of liquidity concerns.
What led up to this?
One of the biggest cryptocurrency mining firms in the country, Core Scientific, filed for Chapter 11 bankruptcy on December 21 due to growing energy costs, decreased income, and the expected decline in the price of bitcoin in 2022. That same day, Core Scientific revealed its plans to "move expeditiously through the reorganization process" while maintaining its mining and hosting activities in a public announcement (1). The lender is a collection of creditors with more than 50% of Core Scientific's convertible notes, which consented to offer debtor-in-possession (DIP) facility commitment loans up to a maximum of $75 million, by court documents.
On December 22 (2), the firm's application was authorized, and according to court documents, the DIP loan will have an interest rate of 10% annually. According to Reuters, which cited a corporate attorney, Core Scientific will be allowed to access $37.5 million right now to keep the lights on and plans to ask for access to the remaining $37.5 million in January. However, it was predicted in the first DIP budget that Core Scientific would submit a $12.5 million application by January 21.
The steps forward
The Reuters story also asserts that the creditors are considering a plan B in light of the bear market's concerns. Play for a while using Core Scientific According to Kris Hansen, a spokesperson for the creditors; the current shareholders "have trust" in the company's future despite its recent problems. According to Core Scientific's third-quarter financial report (3), as of September 30, the company had $1.4 billion in assets and $1.33 billion in liabilities, demonstrating a solid balance sheet despite the bull market.
Notably, the company reported a loss of $434.8 million for the third quarter, bringing the year's total losses to $1.71 billion. As a result, the company warned in late November that, absent a fresh infusion of capital, it was probably on the verge of bankruptcy. According to reports, the company has mined about 12,000 BTC this year, a huge increase from 5,769 BTC. Mined in 2021, but naturally, that hasn't stopped Core Scientific's financial problems.