By Dietrich Knauth
NEW YORK (Reuters) – A U.S. bankruptcy judge on Tuesday approved Core Scientific’s Chapter 11 restructuring, allowing the bitcoin mining company to cut $400 million in debt and emerge from bankruptcy by the end of January.
U.S. Bankruptcy Judge Christopher Lopez approved the company’s bankruptcy plan at a court hearing in Houston, Texas, saying it “provides a tremendous recovery for both unsecured creditors and also equity holders,” who usually fare poorly in bankruptcy.
Core Scientific was one of several crypto companies along with major crypto exchange FTX and crypto lenders Celsius Network and Voyager Digital to file for bankruptcy in 2022.
Core Scientific said that “favorable changes in the cryptocurrency and power markets” allowed for a better-than-expected turnaround. Since the company filed for Chapter 11 in December 2022, bitcoin prices have risen from about $16,900 to about $43,000.
Core Scientific expects to re-list its shares on the Nasdaq exchange. Its existing equity holders retained about 60% of the company’s shares through the bankruptcy, the company said in a Tuesday statement.
Core Scientific “mines” new bitcoins using powerful computers, and it spent heavily on new equipment before suffering setbacks in 2022 that included a sharp decline in bitcoin prices, increased energy costs, and disruption among crypto industry customers partners like Celsius, which owned bitcoin mining computers hosted at Core’s facilities.
Celsius was one of Core Scientific’s biggest customers before both companies went bankrupt, and its failure to pay a $7 million energy bill for its mining activities helped push Core Scientific into Chapter 11.
Core Scientific said its successful restructuring will allow the company to preserve 240 jobs. Its reduced debt will allow it to save $60 million on annual interest costs.
(Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi)