Core Scientific Files For Chapter 11 Reorganization

(RTTNews) - Core Scientific, Inc. (CORZ), a blockchain computing data centers firm, said on Wednesday that it has filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the Southern District of Texas.

The company's filing followed a decline in the its operating performance, liquidity crunch from the prolonged fall in the price of bitcoin, a rise in electricity costs necessary to power the data centers, and others.

As part of its restructuring support agreement, the Ad Hoc Noteholder Group, which represents over half of its holders of the company's convertible notes, has agreed to provide commitments for a debtor-in-possession facility or DIP of up to $56 million.

Ad Hoc has also agreed to support the syndication of up to an additional $19 million in new money DIP facility loans to all holders of convertible notes.

The funds along with the cash generated from operations, are expected to provide a necessary financing to aid the planned restructuring and reemergence from bankruptcy protection.

Core Scientific will continue to operate its existing self-mining and hosting operations, which remain significantly cash flow positive on a debt-free basis.

It also aims to function normally during the implementation of its restructuring.

Core Scientific is being advised by Weil, Gotshal & Manges LLP, AlixPartners, LLP, and PJT Partners LP.