Pressure Mounts on Core Scientific to Hasten Bankruptcy Exit

Core Scientific, a leading crypto mining firm, is facing mounting pressure from creditors and a federal judge to expedite its exit from Chapter 11 bankruptcy. During a hearing on Monday, U.S. Bankruptcy Judge David R. Jones suggested the firm should “trim” its restructuring timeline by at least a month, according to the Coindesk.

Creditors, having shown growing impatience over the slow progress of the bankruptcy proceedings initiated in December 2022, have criticized the firm’s efforts to formulate a restructuring plan. Although initially projected to last six months, the proceedings seem set to stretch for the better part of a year.

Thomas Bean, representing creditor MassMutual, objected to Core Scientific’s request for a 90-day extension to develop a debt repayment plan. He accused the company of slowing the case, saying the firm “has not paid the equipment lenders a dime”.

Core Scientific’s legal team, however, argues that the miner needs more time to adjust to the volatile nature of the crypto mining industry, which has seen Bitcoin prices and hash rates surge as energy costs decline. These changes have allowed the firm to generate increased revenue and pay down $6 million of its debt, according to Ronit Berkovich, a lawyer for the debtors.

Yet, Jared Roche, representing 36th Street Capital among other creditors, argued that the company should respond more rapidly to industry shifts due to its longstanding tenure in crypto.

In a dramatic downturn last November, Core Scientific’s valuation plummeted from $4.3 billion in 2021 to $78 million at the time of its bankruptcy filing in December 2022. This was triggered by a collapse in Bitcoin prices following the mid-November crash of the cryptocurrency exchange, FTX.